The year 2020 brought some dramatic changes in the housing market all over the country, some of which are good and some not so good. As the people learn to live with the pandemic and the housing market starts to stabilize, one can only wonder what 2021 holds.
As growth trends and shifts start to show, it’s now more important than ever that homeowners, buyers, landlords, and other players in the property industry stay up to date with the marketing trends and forecasts.
Housing and Property Trends in California in 2021
The California housing and property market has started showing signs of stabilization towards the middle of the year. Here are other trends you should expect to see.
Low Mortgage Interest Rates
Although the interest rates have risen slightly from 2.7 to 2.8, the rates are still low and within the reach of many. However, as the interest rates start going up, this will affect the borrowers’ or the buyers’ Debt to Income Ratio (DTI).¹
While the buyers will still qualify for mortgages, the mortgage amount will be lower. This will force most to buy cheaper homes and not exactly what they want.
Limited Inventory and Shooting Prices
The California housing market is expected to see prices going up just as it’s happening at the national level. There are lesser houses being listed in the market, causing prices to rise. This is happening because the national housing market is experiencing a shortage of homes by approximately 3 million homes.²
This trend has been ongoing for the last ten years but the pandemic slowed down the construction of new homes causing the housing inventory to be even more limited. California is not exempted from this and this isn’t expected to change in 2021.
Opening Up New Areas
From how the market looks like as explained above, buying a new property to expand your investment and rental inventory is likely to cost you more than before. That makes it look like buying an investment property in 2021 may not be the best idea. However, even though the market is going against your investment plans, there’s still a way to expand.
Since properties in your preferred area may be out of your budget, it might be time to think about expanding to new areas. Go for those markets that were not popular in the past and are starting to grow. Even though prices are also rising in these areas, there’s still an opportunity for a good investment.
The Market of the Unknown
Looking back at what has happened from 2020 to the present, it’s only reasonable to expect the unexpected in the California property market. There are a few unknown things, such as how long the pandemic will last and its effects and after-effects. There’s also the state of foreclosures and moratoriums that affect the supply and demand of homes.
What the Property Trends in California Mean
A lot can change the California property and housing market, mainly if the foreclosures go through. This is because more inventory will be available in the market. The only way to keep up with the market growth trends is by keeping close attention to the changes as they occur.
“About Mountain West Financial and the CalPATH Home Loan Program
Mountain West Financial is the exclusive lender offering CalPATH, the #1 home loan program for Teachers, Police Officers, Firefighters, and other public employees who serve our local California communities.
You may contact our CalPATH Hotline @ 800-310-7577, seven days a week from (8:30 am to 8:00 pm) or visit our website @ mwfdirect.com. A CalPATH advisor will be standing by to answer (any & all) questions you may have about the home buying or refinance process.
We look forward to working with you soon!
CalPATH Division Manager”
Links to External Sources:
- Weekly mortgage applications drop over 8% as interest rates jump briefly https://www.cnbc.com/2020/03/18/weekly-mortgage-applications-drop-over-8percent-as-interest-rates-jump.html
- The US is facing a shortage of nearly 4 million homes as builders struggle to meet exploding demand https://africa.businessinsider.com/news/the-us-is-facing-a-shortage-of-nearly-4-million-homes-as-builders-struggle-to-meet/tfx944b