Beyond Bending Tell You How
As we approach the year 2023, many people are wondering what the housing market will look like in California. Will prices continue to rise? Will there be more inventory available? What impact will the pandemic have on the market? In this blog post, we will take a closer look at the housing market in California and what we can expect in the year 2023.
The Current State of the Housing Market in California
Before we dive into what we can expect in 2023, let’s take a look at the current state of the housing market in California. According to the California Association of Realtors, the median home price in California as of August 2021 was $811,170. This is a 20.5% increase from the previous year. Additionally, inventory levels were down 29.2% from the previous year, which has contributed to the rise in prices.One factor that has contributed to the rise in prices is the low interest rates. According to Freddie Mac, the average 30-year fixed mortgage rate was 2.87% as of August 2021. This low rate has made it more affordable for people to purchase homes, which has increased demand and driven up prices.
Population Growth and Migration
California has long been a desirable location for people to live due to its warm weather, beaches, and job opportunities in industries such as technology and entertainment. However, in recent years, the state has experienced a net migration loss. According to the Public Policy Institute of California, the state lost nearly 200,000 residents in 2020. This is due in part to the high cost of living, including housing costs.Despite this migration loss, California’s population is still expected to grow over the next few years. According to the California Department of Finance, the state’s population is projected to reach 41.6 million by 2024. This population growth will likely contribute to continued demand for housing and could potentially drive up prices further.
Impact of the Pandemic on the Housing Market
The COVID-19 pandemic has had a significant impact on the housing market in California. One of the biggest changes has been the shift towards remote work. Many people are now able to work from anywhere, which has led to increased demand for homes outside of major cities. This has contributed to a rise in prices in suburban and rural areas.Additionally, the pandemic has led to a slowdown in new home construction. According to the California Building Industry Association, building permits for new homes were down 13% in 2020 compared to the previous year. This lack of new construction has contributed to the low inventory levels and rising prices.
What to Expect in 2023
So, what can we expect in the year 2023? While it’s impossible to predict the future with certainty, there are a few trends that we can anticipate.First, it’s likely that interest rates will remain low in 2023. The Federal Reserve has indicated that they plan to keep interest rates low through at least 2023. This will continue to make home buying more affordable and could contribute to continued demand for housing.Second, it’s possible that the migration loss from California could continue. The high cost of living, including housing costs, could continue to drive people out of the state. This could lead to a decrease in demand for housing and potentially lower prices.Finally, it’s possible that new home construction could pick up in 2023. As the pandemic subsides and the economy improves, builders may be more willing to take on new projects. This could lead to an increase in inventory levels and potentially lower prices.
The Bottom Line
The housing market in California is always changing, and it’s impossible to predict the future with certainty. However, by looking at current trends and anticipating future changes, we can make educated guesses about what we can expect in the year 2023. Whether you’re a buyer, seller, or simply interested in the market, it’s important to stay informed and keep an eye on the trends.
