The housing market was so hot at the beginning of the year that as soon as Edwin Baloloy started listing a property, he immediately started inquiries.

"It's a market I've never seen before," said Baloloy, a property salesman with Residential Agent in Newport Beach. Baloloy has been in the real estate market since 2002.

"It really took off," he said. "It got to a point where I went into an offer and started getting calls and I got 15 to 20 offers. It's a hyper-seller market."

What you need to know

  • The coronavirus pandemic has fueled the high number of home sales in the state
  • According to the California Association of Realtors, the median price for a home was $ 820,000 in June 2021, up 30% year over year
  • While the real estate market was hot in the first six months of the year, economists believe the market will slow down in the second half of the year
  • The California Association of Realtors says 75% of California households cannot afford to buy a home in the state

The state's real estate market has cooled in the past two months since then, Baloloy said, adding that many potential buyers have pulled out due to the skyrocketing price, affordability and fierce competition.

Nowadays, instead of getting 15 to 20 offers for a listing, he gets three to five offers, he said.

But despite the decline in supply, there is still healthy demand.

Baloloy's experience in today's real estate climate amid the coronavirus pandemic is a reflection of the housing market across the state.

In its half-year forecast, the California Association of Realtors reported that existing home sales for the first half of this year were 34% higher than last year. The statistic is surprising given that there are 37% fewer homes in the market this year than last year, said Jordan Levine, vice president and chief economist for the California Association of Realtors.

"This growth comes despite the fact that we are in very tight inventory," Levine said during a video conference of the association's annual forecast. "In fact, I would argue that if we didn't have that many buyers, but not enough houses to take them in, we'd be selling more houses by then."

The California Association of Realtors' half-yearly forecast found that the average price of a home – the center of all sales – hit a record $ 820,000 in the state in June. That is 30% more than in the previous year.

The median days a home would be listed was eight days, down 58% year over year.

"Almost three-quarters of the home developments are above asking price," said Levine. "It's just an incredibly competitive market because of this shortage of inventory."

Where and what the Californians bought

As the coronavirus pandemic forced people to leave the office and work remotely, many workers from the city centers moved to remote areas. The record-low mortgage rates boosted the real estate market.

According to the semi-annual forecast of the real estate association, more than 20 cities in the state have grown by more than 40%.

These cities include Big Bear, Malibu, Montecito, Tahoe City, South Lake Tahoe, Lake Arrowhead, Truckee, Indian Wells, and Rancho Murieta.

"All of this is a high quality of life, not necessarily in the vicinity of large work centers that were very attractive to people with these" [remote] Jobs, "Levine said, adding that high-income earners also found these places attractive.

The pandemic has also brought the square footage of a home to the fore, the report said. Levine said the average square footage of a home had increased 100 square feet from 1,755 square feet before the pandemic to 1,859 square feet today.

"This underscores the premium placement," said Levine.

What to expect for the rest of the year

California will continue to experience a housing shortage. However, the number of apartments entering the housing market is increasing. From June 2020 to June 2021, the number of apartments on the market rose by around 8%, according to the forecast.

Still, that number is 15% lower than before the pandemic, said Oscar Wei, deputy chief economist for the California Association of Realtors.

"There is more to be improved and hopefully we will continue to improve in the second half of this year," said Wei.

Wei added that the number of sales and mortgage applications had decreased slightly since June.

By the end of the year, he expects a slight increase in interest rates and an average home price of "around $ 800,000".

"We're going to see some softening," said Wei. "But even though it's getting softer, it's still very firm."

Wei added that while the average home price is expected to drop to $ 800,000 by the end of the year, it is still too much for most Californians.

According to the association's Housing Affordability Index, 75% of households in the state cannot afford to buy a home in this real estate market. That is 7% more than in the previous year of 68%.

"Even if we are a [mortgage] Annual interest rate of 3%, [housing affordability] is a difficult pill to swallow, "said Wei. Hopefully we will see further improvements in supply in the years to come."

source https://seapointrealtors.com/2021/07/31/housing-market-has-cooled-but-demand-is-still-high/

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