California’s housing market continues to be robust – no slowdown this winter! Interest rates remain just under 3% for 30 year, fixed rate loans for most buyers.
Although the new “shelter in place” orders are in effect, buyers and sellers know how to safely navigate viewing homes.
The Good News
According to the California Association of Realtors, compared to the same week in 2019, there were 4.1% more home sales over Thanksgiving this year. The monthly figures for November are likely to be up by more than 20%.
Almost twice as many buyers viewed homes than last year. In other words, homes that are on the market now are seeing a lot of buyer interest, with multiple offers.
Interest rates are predicted to remain at or below 3% at least through the first half of 2021.
The “Wild Cards”
The last 2 weeks of November saw more homeowners applying for mortgage forbearance, due to unemployment. Many Forbearance programs allow homeowners to skip a few payments without penalty, and simply add the missed payments onto the end of their mortgage. Most of these programs limit number of months of skipped payments, however. Whether a new Federal stimulus program will provide additional relief remains to be seen.
Positive tests and hospitalization rates are increasing. Most of California has imposed tighter constraints on economic activity as of early December. This will likely have implications for the housing market as renters and homeowners face associated impacts to their incomes.
Continued tight supply of homes for sale hurts affordability. The number of new listings coming onto the market continues to fall, and the holiday week brought an acceleration in that trend. The total number of active listings, which peaked in May of this year instead of the typical July timeframe, is at its lowest level yet. And although some of the median price growth has been inflated by a higher percentage of high-priced homes selling, prices are still going up much faster than incomes, which is ultimately an issue for many would-be homeowners – counteracting the benefit of historically low interest rates. The housing market continues to be the shining star of the U.S. economy and California is enjoying the same robust surge in buyer demand that has been propelling sales for several months. The next few months will be critical in determining how quickly the rest of the economy can recover during the second half of 2021.