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C.A.R. Releases its 2021 California Housing Market Forecast - California Housing Market Recovery Hinges on Widespread Availability and Usage of Effective Coronavirus Vaccine in Early 2021

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California housing market recovery hinges on widespread availability and usage of effective coronavirus vaccine in early 2021. 

October 19, 2020 - LOS ANGELES – Low mortgage interest rates and pent-up demand from a desire for homeownership will bolster California home sales in 2021, but economic uncertainty caused by the coronavirus pandemic and continued supply shortage will limit sales growth, according to a housing and economic forecast released last week by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

The baseline scenario of C.A.R.’s “2021 California Housing Market Forecast” sees a modest increase in existing single-family home sales of 3.3 percent next year to reach 392,510 units, up from the projected 2020 sales figure of 380,060. The 2020 figure is 4.5 percent lower compared with the pace of 397,960 homes sold in 2019.

The California median home price is forecast to edge up 1.3 percent to $648,760 in 2021, following a projected 8.1 percent increase to $640,330 in 2020 from $592,450 in 2019.

“An extremely favorable lending environment and a strong interest in homeownership will continue to motivate financially eligible buyers to enter the market,” said C.A.R. President Jeanne Radsick, a second-generation REALTOR® from Bakersfield, Calif. “While the economy is expected to improve and interest rates will stay near historical lows, housing supply constraints will continue to be an issue next year and may put a cap on sales growth in 2021.”

C.A.R.’s forecast projects growth in the U.S. gross domestic product of 4.2 percent in 2021, after a projected loss of 5.0 percent in 2020. With California’s 2021 nonfarm job growth rate at 0.5 percent, up from a projected loss of 12.7 percent in 2020, the state’s unemployment rate will dip to 9.0 percent in 2021 from 2020’s projected rate of 10.8 percent.

The average for 30-year, fixed mortgage interest rates will dip to 3.1 percent in 2021, down negligibly from 3.2 percent in 2020 and down from 3.9 percent in 2019, remaining low by historical standards.

“While home prices rose sharply in 2020, driven by strong sales of higher-priced properties and a limited inventory of homes for sale, the pace of price growth will be more moderate in the coming year,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “The uncertainty about the pandemic, sluggish economic growth, a rise in foreclosures, and the volatility of the stock market are all unknown factors that could keep prices in check and prevent the statewide median price from rising too fast in the upcoming year,” Appleton-Young continued.

2021 CALIFORNIA HOUSING FORECAST

 

2015

2016

2017

2018

2019

2020p

2021f

SFH Resales (000s)

409.4

417.7

424.9

402.6

398.0

380.1

392.5

% Change

7.0%

2.0%

1.7%

-5.2%

-1.2%

-4.5%

3.3%

Median Price ($000s)

$476.3

$502.3

$537.9

$569.5

$592.4

$640.3

$648.8

% Change

6.6%

5.4%

7.1%

5.9%

4.0%

8.1%

1.3%

Housing Affordability Index

31%

31%

29%

28%

31%

32%

31%

30-Yr FRM

3.9%

3.6%

4.0%

4.5%

3.9%

3.2%

3.1%

p = projected
f = forecast

* = % of households who can afford median-priced home

Leading the way ...® in real estate news and information for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 200,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
Source: C.A.R.

More Articles ...

  1. California Housing Recovery Continues in July 2020 as Median Home Price Sets Another Record High, C.A.R. Reports – Mariposa County Year-Over-Year Sales Rise 77%
  2. Higher Home Prices and Economic Recession Dampen California Housing Affordability in Second-Quarter 2020, C.A.R. Reports – Minimum Qualifying Income for Median Home Price in Mariposa: $66,000
  3. California Housing Market Claws Back Past Two Months of Losses in June 2020 as Median Home Price Sets Another Record High, C.A.R. Reports – Mariposa County Single Family Home Prices Rise 4.5% Year-Over-Year
  4. Full Impact of Coronavirus Pandemic Hits California Housing Market in May 2020, C.A.R. Reports - Mariposa County Single Family Home Sales Down 48% Year-Over-Year
  5. California Housing Market Feels Full Brunt of Coronavirus Outbreak in April 2020, C.A.R. Reports – Mariposa County Counters Downward Trend as Sales Rise 8.3% Year-Over-Year
  6. Federal Reserve Reports Federal Agencies Encourage Mortgage Servicers To Work With Struggling Homeowners Affected By COVID-19
  7. California Housing Affordability Holds Steady in Fourth Quarter 2019, C.A.R. Reports – Minimum Qualifying Income for Mariposa County: $60,800
  8. Low Interest Rates Boost California Housing Market in Second Half of Year as Home Prices Post Strong Gains in December 2019, C.A.R. Reports - Mariposa County Median Sold Price of Existing Single-Family Homes: $299,900
  9. California Home Sales and Prices Ease Back in November 2019, But Low Rates and Tight Supply Continue to Provide Support to the Market, C.A.R. Reports - Mariposa County Median Sold Price of Existing Single-Family Homes: $410,000
  10. California Housing Market Holds Steady in October 2019, C.A.R. Reports – Mariposa County Median Sold Price of Existing Single-Family Homes: $295,000


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