California Real Estate Market Booming Even As COVID-19 Pandemic Continues
LOS ANGELES (CBSLA) — The coronavirus pandemic has been absolutely devastating for dozens of industries, but when it comes to real estate, houses are selling like never before.
"We had one of the busiest years in real estate on record," Stan Smith, the director of the California Association of Realtors, said.
Smith said that although the year started slow, there were more home sales in the state than ever before.
"I believe that this situation has put a magnifying glass on everyone's living situation," he said. "And your mind didn't think that much about where you were living because you were at work, but now that most people are working from home, that's all you think about."
But getting into a new, bigger home is not that easy.
"The problem in California is that we have much more demand than we have available housing," Smith said. "It is estimated that we need 180,000 new units of housing every year, just to meet demand.
"And, at best, we're getting maybe 90,000," he continued. "We're only adding half of what we need every year, so the deficit continues to grow, and that puts pressure on the existing housing stock and causes prices to go up."
In December, the statewide median home price was $717,930, up 16.8% from December 2019. But the high prices are not driving buyers away.
"In a typical market, you may have a hot property that generates three or four or five offers," Smith said. "But we've been seeing offers on properties that are 27, 28, 29 offers. We had one, a couple of weeks ago, they had 50 offers on a property."
And Smith said that while all areas are booming, proximity remains key for many people.
"One of the things that this new reality has done, [it] has caused a lot of areas to be rediscovered...because they're centrally located," he said.
Smith said that sellers should not unrealistic about the value of their homes.
"Don't think that just because your neighbor got X, you're going to get Y," he said.
As for buyers, he said they should have all their ducks in a row before putting an offer in on a property.
"Make sure that you have not only been pre-approved, but all the underwriting has been done," he said. "If you can show the seller that you have gone through that process your chances of getting that deal are much, much greater."
Smith said buyers better have all of their financials in line because with the competing offers comes a little bit of a price war, which has caused one-third of all listings to sell for more than their original asking price.