By Brian Johnson
Santa Barbara Association of Realtors
The California housing market had an outstanding performance in the first half of 2021, with both sales and its median price growing by double-digits year-over-year. Looking forward to the second half of the year, housing demand should remain solid but will likely slow as buyers are getting tired of submitting so many offers before they get an acceptance.
We saw a slight dip in the year to date sales numbers in May but they rebounded in June. Additionally, the median price of a home in California continues to rise but the rate of appreciation is beginning to flatten. Could this be a sign of a cooling off in the market? As more and more businesses return to the office and clients tire of bidding wars, we could begin to see a normalizing effect in the housing market. Do not look for prices to drop any time soon though.
Adding to the evidence of a cooling are mortgage applications. Applications have been decreasing steadily and just reached the lowest level in 18 months. Some of this can be explained by the large number of cash buyers, but this certainly is having an effect on the market. We have also seen more listings coming to market. Summer months typically see a higher number of new listings so this is not out of the norm, but buyers are certainly happy to see even a slight increase in inventory.
The overall view of the economy remains strong. More and more businesses are reopening, hiring is picking up and consumer confidence is at a sixteen month high. These are all good signs that our housing market will remain strong. Inflation fears seem to have receded for now and the vaccination efforts in California continue to improve. There remain many variables that could have a negative impact on our recovery, but there are no looming storm clouds on the horizon for now.
Brian Johnson is a California licensed real estate agent and the Managing Director of Radius Commercial Real Estate. Brian handles all types of commercial real estate transactions but has a special focus on multifamily investments. He can be reached at 805-879-9631 or firstname.lastname@example.org