Exploring California’s Surging Housing Market: Median Prices Exceed $900,000

Dreaming of buying a home in California? Get ready to dig deep into your pockets, as the statewide median sales price for existing single-family houses crossed the $900,000 mark for the first time in April. This milestone underscores the stark reality of California’s increasingly unaffordable housing market.

In April 2024, the median home price surged to $904,210, marking an 11.4% increase from the previous year. This rapid escalation means median prices have skyrocketed by over $100,000 in just over two years.

Despite historically high mortgage rates—averaging 7.02% for a 30-year fixed mortgage, more than double the rates seen during the COVID-19 pandemic—home prices continue their upward trajectory. Economists attribute this trend to a severe shortage of housing inventory, exacerbated by homeowners reluctant to sell and lose their advantageous sub-3% mortgage rates.

Wealthy buyers in California, armed with excess cash, are also driving up prices by making hefty down payments that help offset high borrowing costs.

Looking ahead, if prices continue to rise at the current annual rate of 11%, California’s median house price could surpass $1 million by 2025. However, recent indicators suggest a slight shift in market dynamics. More homes are entering the market as some owners prioritize moving over holding onto low mortgage rates.

While housing inventory remains critically low, there are signs of improvement. Counties like Los Angeles, Riverside, San Bernardino, and Ventura have seen increases in total listings compared to last year, hinting at a potential easing of the supply crunch. In San Diego County, inventory has risen by 18% year-over-year, marking consecutive monthly increases.

Despite these developments, experts caution that the influx of new listings may not be enough to significantly lower home prices. Instead, it could slow the pace of price appreciation, possibly delaying the anticipated milestone of a $1 million median price, albeit marginally.

“In the absence of a major economic downturn, if we don’t reach the $1 million mark in 2025, it’s likely we will do so by 2026,” predicts Jordan Levine, chief economist at the California Association of Realtors.

As California’s housing market evolves, prospective buyers and sellers are navigating a landscape shaped by high demand, limited supply, and ever-increasing prices, setting the stage for challenging decisions in the real estate arena.

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