It’s no big secret that the California real estate market has been hotter than ever in 2021. There have been several distinct trends, some of them related to the Covid-19 pandemic, that have made this year particularly exciting and successful for people selling their homes in the local area. Although it’s definitely a seller’s market, buyers have also done well because the price of real estate keeps rising, so they are in the green very quickly after their purchase.
As the pandemic starts to ease, many younger professionals are deciding to return to the city centers. On the other hand, people with families are settling into their new suburban or even rural lifestyle and looking for lots of space. Due to these changes, we may be able to expect more turnover in the future, which is good for those people looking to purchase a new property in the local area. Let’s explore the trends a bit closer.
7 Trends We’ve Seen in the 2021 California Real Estate Market
1. A Seller’s Market
The local real estate market has been great for sellers for a number of years now. There are many more people looking for a property than there are houses on sale, which means that there is a perpetual state of demand in California. This rapidly pushes up prices, which is why the housing market has grown so much faster than general inflation in the last decades.
If you’re hoping to sell your home, you can expect conditions to be excellent. You’ll get a great price for your property, and it will most likely sell within 1-2 months. While you might have to wait for four months in a more balanced market, you can expect to make a quick and advantageous sale now. More than 50% of properties are sold above the listing price, so you will receive more money than the property is, objectively speaking, worth.
2. A Race for Space
All over the country and the world, people have been embracing working from home. However, many families felt constricted during the initial lockdown, since their homes weren’t set up for this process. As a result, these households are now looking to expand and find a more suitable property that includes plenty of space for a home office.
Many professionals are not looking to return to their former workplace full-time, and they will work at their primary residence for at least 2-3 days a week. This means that they are more location independent and potentially looking to move out of the busier downtown areas. Homes located in quiet, suburban areas are more popular than ever, especially if they are close to great leisure activities and include some outside space.
3. A Return to Downtown
In contrast to this move towards more spacious homes, younger professionals are coming back to the busier areas in the center of the city. After spending many months working from home, they are now excited to get back to their in-person jobs and immerse themselves in the culture and nightlife available in Los Angeles or San Francisco.
As a result, condos, apartments, and small houses closer to the center are becoming more in-demand again. In particular, these well-paid professionals are looking for luxury accommodation that is both fashionable and convenient. If you own such a property, the next few months might be a great time to sell, as you can expect more and more people to return to your area.
4. Soaring Prices
Property prices have been increasing rapidly in California for many years, and 2021 was no exception. Depending on the exact area you’re looking at, you might have seen a price growth of 10% or more. In fact, in Los Angeles, homes are now worth $790,000 on average, which is over 23% higher than it was a year ago.
This is good news for both sellers and buyers. The former will get the maximum price possible for their listing, and they will be able to either purchase a new property in the local area, or they can move out of California and benefit from their advantageous sale. Buyers will need to pay a high price initially, but their assets will start to appreciate immediately, so they won’t have to wait long until their purchase has paid for itself.
5. New Homes Are Being Built
One of the great problems in the California real estate market is that there are not enough homes available for everyone who wants to live there. The climate is mild, highly paid jobs are abundant, and the people are friendly. What’s not to like? This popularity, coupled with the fact that it is challenging to build new housing, has caused the current high demand.
But in 2021, some developers have been able to construct and sell new properties in the local area. According to Daily News, 391 new homes have been built, which is 66% more than last year. Many of these properties are in the $750,000 price range, so they will be accessible to professionals looking to purchase a high-quality condo or house.
6. Mortgage Rates Remain Reasonable
Another reason why there are so many buyers is that mortgage rates have been excellent in recent years. Although the home prices have increased drastically, many people have still been able to afford a home because their mortgages have been so reasonably priced. This trend has continued into 2021, so you should still be able to get a great deal if you decide to buy now.
A 30-year, fixed-rate mortgage will cost you around 3%, which is cheaper than it was a year ago and can make up for some of the swings in house prices. The fact that your mortgage is reasonably priced and your home is likely to appreciate rapidly makes buying now a good idea, no matter where in California you’re located.
7. More Turnover on the Horizon
A final trend is that turnover has been increasing, which means that there are likely to be many more homes for sale in the coming months. Since February, there are about 10% more properties for sale in southern California, so you should be able to find a great place that suits your needs. Remember that turnover fluctuates from month to month, so you’ll see more homes for sale in the springtime than in autumn or winter.
2021 has been a particularly good year for sellers, but everyone has been able to benefit from the rapid increase of the California real estate market. Buyers who purchased their home a year ago are already looking at a profit of over 10%, and this is likely to increase in the coming year. People who want to sell their property in the near future can expect it to move quickly and for more money than the listed price.
Although the overall outlook is good, every region is slightly different, and you might experience some variation depending on where exactly you live. A highly competent real estate agent can help you to analyze your property to find out exactly how much it will be worth and how easy it will be to sell. They can also let you know what to do in order to maximize your asset’s value. The easiest way forward is to contact such a professional.