California's housing market has reached a remarkable milestone, as the median home price exceeded $900,000 for the first time in history. This achievement comes just over two years after the median home price crossed the $800,000 mark in March 2022. The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) recently announced this new record, highlighting a significant rebound in the state's housing market.
California Housing Market on Fire: Median Home Price Tops $900,000!
April's Record-High Median Home Price
In April 2024, the statewide median home price surged to $904,210, marking an 11.4 percent increase from April 2023's $811,510. This new peak represents a 5.8 percent rise from March's median price of $854,490. Notably, April 2024 was the 10th consecutive month of year-over-year price increases in California, a trend driven by seasonal factors and tight housing supply conditions that are likely to continue pushing prices upward.
High-End Market Outperforms
Sales of homes priced at $1 million and above have shown remarkable resilience, significantly outperforming more affordable properties. In April, the $1 million-and-higher market segment experienced a substantial 39.8 percent year-over-year increase, while the sub-$500,000 segment saw a moderate decline of 8.0 percent. High-end homes accounted for 36.4 percent of all sales, the largest share in at least the past five years. This shift towards higher-priced homes has contributed to the upward pressure on the statewide median price.
Market Outlook and Influencing Factors
C.A.R. Senior Vice President and Chief Economist Jordan Levine noted that while April's performance was solid, a rapid recovery is unlikely as long as inflation remains persistent and mortgage rates fluctuate. However, the increase in housing inventory is expected to provide much-needed supply, potentially facilitating a higher level of home sales in the latter half of the year.
Sales Figures and Trends
In April, closed escrow sales of existing single-family detached homes in California reached a seasonally adjusted annualized rate of 275,540. This figure, derived from data collected by C.A.R. from over 90 local REALTOR® associations and MLSs statewide, represents the total number of homes sold in 2024 if the April pace continues throughout the year, adjusted for seasonal variations.
April's sales pace showed a 3.0 percent increase from March's revised figure of 267,470 homes and a 4.4 percent rise from the previous year's 263,960 homes. Despite these gains, the sales pace has remained below the 300,000-threshold for 19 consecutive months. Year-to-date home sales have grown by 1.6 percent.
Market Resilience and Buyer-Seller Adjustments
C.A.R. President Melanie Barker emphasized the resilience of California's housing market, noting that the rebound in both home sales and prices indicates that buyers and sellers are adapting to the higher interest rate environment. Market fundamentals are improving, competition is rising, and homes are selling faster. Nearly half of the homes are selling above the asking price, the highest proportion in nine months.
While the market is currently strong, experts predict a slowdown as economic factors like inflation and fluctuating mortgage rates come into play. However, an increase in housing inventory is expected in the latter half of 2024, which could help ease price pressures and facilitate increased sales activity. This potential rise in inventory presents a glimmer of hope for first-time buyers who may have been priced out of the market earlier.
For home buyers, careful planning and financial preparedness are paramount. Consider getting pre-approved for a mortgage to understand your budget limitations. For sellers, the market presents a strong opportunity to maximize your return on investment. However, with rising interest rates, it's crucial to price your home competitively to attract qualified buyers.
Overall, California's housing market has demonstrated significant resilience and adaptability, reaching new heights with the median home price surpassing $900,000. The strong performance of high-end homes, coupled with increasing inventory and buyer-seller adjustments to higher interest rates, suggests that the state's housing market is poised for continued growth. While challenges such as inflation and fluctuating mortgage rates persist, the market fundamentals are showing promising signs of improvement.
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