Whether you are looking to move into a new house, or are a first time home buyer, you might be wondering if now is the right time.
The right answer is more than a simple yes or no. Everybody is unique, and ultimately only you can decide whether it’s time. When we take a look at California real estate, there’s a lot that suggests now is a great time to get into a new home.
The Current State of the California
According to the California Association of Realtors (CAR), single-family home sales saw a 5.6% increase from September to August, the largest single month jump in the last year. The median price for all home types sold in September came in 13.5% higher in 2021 than September of 2020.
A forecast out of UCLA shows construction on new homes increasing dramatically well into 2022 and 2023. The California governor just signed off on bills giving the green light for housing construction of an estimated 84,000 units at the cost of $22 billion.
Demand for California Property Never Ceases
California housing is always under high demand, and continues to be sought after by people looking to live in the state. This separates the state’s market demand from the rest of the nation. Everyday, people from all over the world (and the country) are looking to move to our beautiful region.
The Suburbs Continue to Trend
The pandemic offered many potential home buyers an opportunity to migrate away from higher priced urban centers, as many faced a “work from home” environment for an indefinite amount of time. According to multiple housing experts many are still working from home either full-time or within a hybrid model. This means that the ‘burbs are likely to remain a hot commodity moving into the next year.
Three major housing lenders project continued home price appreciation for 2022. Below are their forecasts:
California is primed for growth. New construction is not expected to outpace demand for both houses and rentals.
In September alone, demand for rentals in Orange County skyrocketed. Statewide, sales-to-list-price-ratios show growth, up 1.9% over last year.
Redfin’s Latest Report for October
Redfin’s August report stated a 15% rise year-over-year in home’s selling above list price, a trend anticipated to continue on into 2022.
Will California’s Home Prices Continue to Rise into 2022?
A lot of buyers are asking whether home prices will rise or fall? Renters are wondering if rent prices will fall? High demand, low mortgage rates, and low inventory will likely skew homes and condo prices higher.
As inventory levels continue to increase, part of the inventory expected to hit the market next year are smaller and more affordable homes.
Trends show that smaller homes will continue to be listed in increasing numbers.
The availability of more affordable inventory coming to market will give homebuyers different options at different price points, which is great for first time buyers who aren’t in the market for a mid-tier or luxury home.
Experts don’t believe that the rise in inventory is going to drive down the values on homes. The data shows continued growth on home values.
Recent predictions from CoreLogic’s home price report show an expected 3.2% increase in home prices before next June, with other reports floating expectations of prices rising by as much as 12% by July 2022. The good news is that prices are rising at a slower pace than what we saw for almost the entire last year.
Considering the 18.6% increase we saw from June 2020 to June 2021, this data still comes as a relief to potential buyers in the market. So for those looking at moving into a new home, the next few months will be primed for you to make your move.
Mortgage Rates Still Great in the Golden State
Record low mortgage rates tempted many would-be homeowners to obtain a new mortgage (or refinance) while the prime rates were available. Though experts don’t forecast mortgage rates to skyrocket any time soon, they do see them trending upwards by the end of the next year.
For example, currently the 30-year fixed mortgage is hovering around 2.9%, but by the end of next year, both Freddie Mac as well as Realtor.com anticipate rates to tick back up towards 4% nationwide.
Mortgage rates in California, with a population of 39.5 million people, continue to rise when compared to the rest of the nation.
What if both home values and mortgage rates rise together?
There was a 29.3% increase in national homeowner equity year-over-year from 2020.
That means when compared to forecasts for next year, now is a great time to buy. If both variables continue to increase, you will end up paying more each month in mortgage payments for any given home.
Buying a home now allows you to get a head start on equity building before next year.
California Rentals in 2022
The national housing market has continued to be pressured by lack of available inventory. This will continue to affect buying decisions for potential homeowners well into 2022. Currently rent growth continues to rise in San Diego, Fresno, Bakersfield, Anaheim, Orange County, and Los Angeles.
A number of factors contribute positively to California’s stats:
-Record-low mortgage rates
-Moving to regions (pandemic destination) that offer more room perhaps with an office or garden
-Desire to live away from the city in suburbs and rural regions and willingness to pay top dollar for homes
-Wealthy buyers have the funds ready
Though this year was most readily characterized as hypercompetitive, data shows that buyers will have increasing options on the market to choose from when looking for their next home. This is a shift back towards what we have come to know as the “normal market”, one where potential buyers are not competing so fiercely for the limited inventory of available homes like we saw over the last year.
What does all of that mean for you?
Understanding equity can make home ownership an obvious and worthwhile goal. Across the nation over the last year, homeowners gained on average over $50,000 in equity this year alone.
So, Is It a Good Time to Buy?
Whether you are looking to get into the home buying market for the first time, or looking for your forever home, only you can really know if now is the right time to buy.
The numbers, however, support those looking to take action now. With forecasts showing increases in both home values and mortgage rates continuing into 2022 and beyond, there is plenty of incentive for homebuyers to take advantage of.
The homebuying process is different for everyone, and not to be taken on lightly. Take your time, do your research, and talk with a licensed realtor that knows the market in your area before making any decisions.
Not All Markets are Equal
Once you have an idea of what you are after, speaking with a trusted real estate agent who knows your local realty market is the next best step you can take. From home discovery to closing day, a good real estate agent helps their clients navigate the many steps of the buying process.
Knowing the ins and outs of a local market is what any good realtor brings to the table. At the Jordan Ott Group, we know this to be true, and offer years of experience and insight in Southern California real estate to each and every one of our clients.
Have an Agent That Knows the Industry, Inside and Out.
Unless you are coming into the market with years of experience, a good real estate agent saves their clients time and money. Getting you the best deal possible and negotiating for you every step of the way. So when’s the best time to buy a home in California? When you’re both confident and ready to find the right fit for you.
Where We Go From Here
If you are considering a new home, whether it be your first time buying, or you are looking for your dream home, one of the first steps remains the same. Find a realtor who knows your local market, and who you can count on.
Start the Conversation Today
Are you looking to make your next move? It all starts with a conversation about your home buying goals. When you’re ready, we’re here.