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2021: The Future of the California Housing Market
It’s been a busy year for the Sacramento housing market. Although homebuyers have been migrating here for years, 2020 created even more opportunities for many to move further away from real estate hot spots like the Bay Area. The wave of jobs moving toward a work-from-home model opened possibilities for workers, including those Silicon Valley employees no longer tied to an office building.
Many have been looking for housing elsewhere in lower cost-of-living areas. And why not choose Sacramento? It’s a beautiful city with a lot to offer and affordable housing. In fact, in a recent article published by Home Buying Institute, it’s suggested that Sacramento’s real estate market could be one of the hottest markets in California in 2021, if not the whole country.
But will that stay true in 2021? Keep reading to hear our local housing market predictions for the New Year.
Sacramento Housing Market Predictions
If you’ve been thinking about changing addresses, it’s not too late. Sacramento is booming, but not in a way that’s unsustainable. We don’t have a crystal ball, but we’re confident about making a few predictions for the local real estate market in 2021.
Sacramento Attracts Residents from High-Cost CA Zip Codes
With interest rates at historic lows and the cost of real estate significantly less than many of the coastal hot spots in the state, places like Sacramento and Fresno have become more appealing for families looking for more space. And what many people found is that they needed more space.
The reality is that city living is a little less attractive when space becomes a commodity. Many are opting to trade in condo living for a home with room to grow, work from home, and homeschool. We do not anticipate this need changing in 2021, keeping Sacramento a hot spot in the state of California.
Inventory Remains A Challenge
The demand for more space and affordable housing in one of the hottest housing markets in California comes challenges. One of those is inventory. There currently are not enough homes listed for sale to meet the demand from buyers. But in Sacramento, that shortage is more severe than in many other major cities. Largely due to the fact that it is one of the few affordable housing markets in the state.
According to the Sacramento Association of Realtors, October 2020 saw median days on market (the time for a listed home to switch to pending) of just six days. A year prior, it was 14 days, a 57.1 percent drop. Houses available for sale have also declined in 2020. With less than one month of inventory available for buyers—this often creates a hot market that moves fast.
If you are looking to buy in the Sacramento area, it’s important you are ready to go when you make an offer and have your financing in place. New Way Mortgage can help, so click here to get a quote or apply now.
Increasing Housing Prices in 2021
A shortage in inventory suggests that home values could continue to rise, despite the economic downturn. A tight market with limited inventory typically puts upward pressure on home prices.
Housing economist Jeff Tucker recently commented on this topic, stating that the Sacramento real estate market is even hotter than the Bay Area’s, and that’s largely because of the inventory situation. He pointed out that housing inventory in the area was down by a “staggering” 30% year-over-year. “That suggests to me that in the near-term, Sacramento is going to continue feeling a lot of pressure on the listings that are on the market,” Tucker said.
The change in median sales price year over year from October 2019 to October 2020 was up 14.3 percent. This type of equity gain creates more wiggle room for those looking to refinance or sell their Sacramento home at the top of the market.
Quicker Job Recovery from Pandemic
Many areas throughout the state have been hard hit by the pandemic, and Sacramento is no exception. However, there are a few things working to our advantage that could signal a quicker recovery.
- The job market is quite diverse and continues to benefit from the flight of remote workers relocating from other parts of the state.
- The local unemployment rate is starting to decline.
Stay tuned to our blog and social media channels for more updates on the local Sacramento and California housing market.
If you’re considering buying a home this year, we’d love to chat. When you’re ready to get started with your mortgage, just give New Way Mortgage a call or text at (916) 465-6639. Or, visit bit.ly/35BoA3f to request a free quote on your future purchase or home refinance.