California house prices hit record high for 4 consecutive months – Orange County Register

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“Bubble Watch” explores trends that may indicate upcoming economic and / or housing market problems.

Buzz: California home prices hit their fourth straight record after gaining 17.6% year-on-year.

Source: California Association of Realtors

The trend

The median selling price of an existing single-family home in California was $ 712,430 in September from $ 605,680 a year earlier, creating the biggest percentage point jump since 2014. A buying spree fueled the gains in prices, with homes selling at 489,590-a year-on-year – up 21% year-on-year, the fastest pace since February 2009.

Dissection

The housing rebound after a spring decline linked to the coronavirus has been fueled by historically low mortgage rates and the pandemic’s push to own larger living spaces.

Note these September statewide trends from the Realtor Report …

There is nothing to buy: The real estate agent’s unsold inventory index hit its lowest level since November 2004. The number of listings under $ 1 million is down 56% in one year

Sales are fast: Typical time between registration and escrow? A record 11 days in September, up from 24 a year ago.

Buyers pay: The sales price / list price ratio was 100% in September – in theory, no discount from the first listing price – compared to 98.5% a year earlier.

Part of this could be a “mixing” problem: Homes sold averaged $ 321 per square foot, up 11% in one year. This suggests that more expensive homes are selling, creating a large increase in the median price.

How sparkling?

On a scale of zero bubble (no bubble here) to five bubbles (five alarm alert) … THREE BUBBLES!

Let me just quote the association’s chief economist, Leslie Appleton-Young.

“It sounds like a record as California home sales and prices continue to beat expectations. However, with the shortest time in the market in recent memory, an alarming supply of homes for sale, and the fastest growing prices in six and a half years, the market’s short-term gain may also be its weakness to more. long term. over time, as the imbalance between supply and demand could lead to more housing shortages and more serious affordability problems.

PS: Real estate agents’ ‘most likely scenario’ forecast for 2021 calls for price growth of 1% and sales of 3%.


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