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Is the housing boom about to end? Here’s what you need to know about the current housing market

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Is the housing boom about to end? 😮 Are California home prices dropping and is the real estate market cooling off? The California housing market moderated for the fourth month in a row in September 2021. After a busy summer, the state’s housing market continues to stabilize. Let’s look at the California Association of Realtors (CAR) Report for September and see what the trends are telling us about this current market and where it is headed.

➡Closed Sales
September saw a recovery in existing house sales which reversed a four-month slump.
September’s monthly sales pace was up 5.6 percent from 414,860 in August but down 10.5 percent from a year earlier, when 489,590 houses were sold. The month-over-month rise was the highest since August 2020, and despite continuing declines from the previous year, statewide sales increased 16.8 percent on a year-to-date basis.

➡California Median Home Price
After setting another record in August, California’s median home price declined to $808,890, down 2.3 percent from $827,940 in August. The September price was 13.5 percent higher than the $712,430 recorded last September. The median price in California remained above the $800,000 benchmark for the sixth consecutive month but the double-digit price year-over-year price gain was the smallest in 14 months. A change in the mix of sales, once again, played a role in the change in the statewide median price, as the sales share of million-dollar continued to shrink on a month-to-month basis, and prices in the high-end market have been growing at a slower pace than the low-end market in the past two months. Part of the reason for the decrease may be from a drop in luxury home sales, increasing inventory and seasonality.

➡Days on market
Homes are flying off the shelves in record time. The median number of days it took to sell a California single-family home inched up from 9 days in August to 10 days in September and was slightly lower than the 11 days in September 2020. Tight inventory and low mortgage rates, similar to national housing market trends, are fueling the rise in California home prices.

➡Housing Supply
After increasing for the past six consecutive months, California’s housing supply leveled off in August as the market transitioned into the off-season.
The number of for-sale properties dipped slightly from July by 2.6 percent and continued to fall from last year by 10.9 percent. The year-over-year decline was the smallest in two years. New active listings also dipped from a year ago for the second straight month, after growing for four straight months from March through June. The dip in new active listings is partly due to seasonality, but the surge in COVID cases may have played a role as well.

➡What are the trends telling us?
These trends show us that the California housing market remains very competitive.
Growth of sales are prices are driven by low mortgage rates, buyers seeking more living space, and a perennial shortage of housing supply. Homes are selling quickly with a minimal price reduction. The statewide sales-price-to-list-price ratio was 101.9 percent in September. It was the lowest level in seven months. If it’s above 100%, the home sold for more than the list price. If it’s less than 100%, the home sold for less than the list price.

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