It’s not a surprise that Californians pay a high price to live in the Golden State and that fact was emphasized during a frantic, hot real estate market in 2021.
What’s the projection for 2022? The housing shortage is likely to continue into the new year, according to HouseCanary. And although prices are predicted to continue to rise in 2022, it’s expected to be a less dramatic increase than 2021.
What is the impetus for the strong real estate market? Homeowners in California continue to purchase homes at a brisk pace, fueled largely by interest rates, which remain near historic lows.
Interest rates alone are not fueling the demand. COVID-induced remote work environments have allowed home buyers to consider moving to new locations with potentially larger homes, roomier lots and a more relaxed lifestyle.
However, the number of houses available on the market remains limited. Long-time homeowners are not moving as they were in the past due to low rates on current mortgages and low property taxes resulting in low supply for anxious home buyers.
Should Home Buyers Stay in the Market?
Although real estate experts at the California Association of Realtors predict a steady increase in prices to buy a home in the Golden State, the forecasted growth will likely continue at a slower pace than it did in 2021.
Oscar Wei, Chief Economist of the California Association of Realtors, encourages California residents not to lose faith. While prices may be rising to buy a home, the interest rate on loans is predicted to stay near its all-time low, and residents considering buying a house in California should move forward.
"Way back in 2005, 2006, that's when the housing market was really hot too... at that time, the interest rate was around 6 percent," Wei said.
The low interest rates of the last year and a half have really motivated a lot of buyers to actually jump into the market. “The best time to buy was probably 10 or 15 years ago when the price was really low," Wei added. "But we can't go back in time, so we should take advantage of low rates."
Do you have questions about the Sonoma County real estate market? I’d love to help you strategize for 2022!