California Home Prices Reach Record Highs Amid Market Challenges
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by Biazowa
- May 24, 2024
- Regional Trends
In April, California home prices reached new heights, even amid high mortgage rates and a statewide housing shortage. The median price of a single-family home soared to $904,210, marking a nearly 6% increase from March and an 11.4% rise compared to April 2023, according to the California Association of Realtors.
Rising Prices and Sales
Jordan Levine, the association’s chief economist, noted that both sales and prices are climbing despite the Federal Reserve’s rate hikes, which have diminished purchasing power. Last week, the average fixed-rate for a 30-year mortgage was 7.02%, significantly higher than the historic lows seen during the COVID-19 pandemic but three-quarters of a percent lower than October 2023.
The Supply Issue
Levine highlighted a critical issue exacerbating the market’s tightness: many homeowners are locked into low mortgage rates from previous years. This situation limits the number of homes available for sale, driving up prices as demand increases when rates slightly decrease. “The supply issue is probably worse right now because we have so many people locked into those low rates,” Levine said.
Regional Price Changes
The data reveals significant regional variations in median home prices:
- Los Angeles Metropolitan Area: $840,000 (13.5% increase from April 2023)
- Central Coast: $1,077,500 (5.6% increase from April 2023)
- Central Valley: $493,500 (6.6% increase from April 2023)
- Far North: $364,900 (5.2% decrease from April 2023)
- Inland Empire: $607,000 (7.4% increase from April 2023)
- San Francisco Bay Area: $1,444,000 (15.5% increase from April 2023)
- Southern California: $880,000 (12.1% increase from April 2023)
The Need for More Housing
Levine pointed out the long-term issue of underbuilding, which has persisted despite substantial job and population growth over the last two decades. “Wherever you go in the state, we’re not building enough,” he stated. “We’ve got a lot of housing to build no matter where we’re talking about.”
