The housing market in California over the summer was arguably hotter than it’s ever been, with homes flying off the market at record prices. And it looks like things aren’t going to cool off for the rest of this year.
According to a new forecast from the California Association of Realtors, home sales are expected to hit a five-year high this year, increasing nearly 7% over last year.
The report shows that there are projected to be 439,800 sales of existing single-family homes in 2021, up from 411,900 in 2020.
Not only are home sales on the rise, prices are also expected to well exceed the previous record high. According to the report, the median sales price for a single-family home in California this year is expected to be $793,100, up more than 20% over last year.
However, CAR suggests there may be some relief for California homebuyers next year. According to the forecast, home sales are actually projected to decline 5.2% in 2022, down from this year’s sizzling pace, but still above 2019’s total.
"A slight decline next year from the torrid sales pace of the past year-and-a-half will be a welcome relief to potential homebuyers who have been pushed out of the market due to high market competition and an extremely low level of homes available for sale," CAR President Dave Walsh said.
"Homeownership aspirations remain strong and motivated buyers will have more inventory to choose from,” Walsh continued. “They will also benefit from a favorable lending environment, with the average 30-year fixed rate mortgage remaining below 3.5% for most of next year."
While CAR also predicts that house prices will continue to rise next year, the pace of growth is expected to slow from this year’s 20.3% to 5.2% in 2022.
“An imbalance in demand and supply will continue to put upward pressure on prices, but higher interest rates and partial normalization of the mix of sales will likely curb median price growth,” CAR notes in its report. “Additionally, a shift in housing demand to more affordable areas, as the trend of remote working continues, will also keep prices in check and prevent the statewide median price from rising too fast in 2022.”