Happy New Year! The California Association of Realtors (C.A.R.) chief Economist publishes his annual housing market recap and market forecast every October. As a Realtor with a degree in economics, I eagerly await it being published. . Seriously, It's like Christmas! For those of you who will be bored after a couple of sentences, I will get right to the meat of it! Here is what we can expect in 2022:
*There will be approximately 5.2% fewer home sales in 2021.
*Housing prices will continue to rise, but at an estimated rate of 5.2%, much more modestly than the last couple of years.
*Mortgage Interest Rates will increase slightly to an estimated 3.5%.
*Overall, housing affordability in California will continue to decline, despite low interest rates.
The Chico Market continues to be hot. Cooling, yes, but far from cold! Unlike the rest of the state, homes sales in Chico actually decreased 1.2% with 1,283 single family homes sold in 2021 compared to 1,298 in 2020 and 1520 in 2019. Prices however continued to rise at a shocking rate. The median sales price for a single family home in Chico rose 10.7% to $465,000, while the average sales price rose 11.1% to $513,391.
This morning, January 2, 2022, there are only 53 single family homes for sale in Chico. For context, there were 94 homes listed on 12/31/20, and 160 on 12/31/19 AFTER the Camp Fire!. Starting 2022 with such unbelievably low inventory levels is sure to continue to push prices up, leaving Chico firmly in a Seller’s market. We have a ton of clients who would LOVE to sell and to step up into larger homes, but with so little inventory available, and the competition for those homes, we are finding would-be sellers feel stuck, and are staying put. This is a big advantage to the first time home buyer, who does not need to write a contingent offer (coordinate selling their existing home with closing on the new home). In fact, CAR economists found that first time buyer’s were at an all time high in 2021.
CAR also noted that the California markets with the most growth were the luxury markets and the rural areas. No surprise as those living in urban areas during COVID began seeking more house and more yard to accommodate families working and learning from home. In fact, the average home size for homes purchased in 2021 jumped by approximately 100 sq ft. for homes purchased last year. No coincidence, that’s roughly the size of a home office! Nearly 7% of California’s home sales were purchases of 2nd homes. So who WAS selling in 2021 while home prices were reaching an ALL TIME HIGH? CAR reports that a whopping 35% of sellers left the state in 2021. In fact it was the first year in recorded history that California’s population shrank.
We are constantly asked if the bubble is going to burst again. My answer is a resounding NO! It would really take an unforeseen economic downturn or natural disaster to weaken the California housing market. Experts say that we have not built enough housing to keep up with demand for 34 years. That’s A LOT of pent up demand. We have all-time inventory lows and the lowest vacancy rates in the nation. Our challenge is INVENTORY!
If you are curious what your home is worth, reach out to us for an estimate or use the automated tool on our website. We are associated with some of the best lenders in the industry. There are bridge loans, recast loans, home equity loans and several other options for making your home purchase happen. Let’s connect and see if 2022 is your year to achieve your real estate goals!