Now that it’s the end of January and the dust has more or less settled around 2020, we turn a collective eye to the road ahead. Despite high unemployment due to the pandemic, it is undeniable that real estate throughout the country, and in particular California, remains a bright spot in the economy. The question is: How will this bull market fare in 2021?
So far, most indicators point to a real estate market that will continue to be extraordinarily active and strong. For one thing, it appears that interest rates will remain at all-time lows. And secondly, the “urban flight” trend looks like it is here to stay for awhile as the desire for space and privacy grow hand in hand with working from home. What remains unclear is what role possible mass home foreclosures might play as government financial protections related to the pandemic continue to linger in limbo. For California in particular, more inventory on the market is what is needed to alleviate pent up buyer demand, so foreclosures may have little negative impact in terms of supply and demand. Time will tell.
If you are a seller, it is said that your home might not ever be worth more than it is now. The 2021 market is so far shaping up to be a sellers’ market. Both anecdotally and statistically, it appears that many California sellers–roughly 30%– are considering leaving the state altogether and likely heading for more affordable and less restrictive climes. States such as Texas, Arizona, Nevada and Tennessee are the top four destination trends. It will be interesting to see what the outcome is for so many transplanted Californians. Although California has its share of messy problems and complexities, it’s hard to deny the many benefits of living in California, prime among them the climate. In addition to climate, California is renowned for its personality as a progressive, cosmopolitan lifestyle-state that is truly unique to California alone. These are traits that are hard to recreate but easy to take for granted until you move elsewhere. Additionally, Proposition 19 will likely make it less punitive for older homeowners with a lower tax basis to relocate within the state, so that could free up inventory and create a more active market as well. And while some California sellers are choosing to move out of the state, there appears to be international buyers ready and able to take their place. In 2020 California was the top destination state for international buyers from China, Canada, India and Mexico, respectively.
So if you’re a buyer and wanting to stay in California while you realize the American Dream, what’s in the cards for you in 2021? More than likely, you will see housing prices remain high and inventory remain tight. What is almost certain is that if you are preapproved to buy, waiting for prices to come down is probably a lost cause. At some point you just need to jump in, regardless of the current bumps in the road. With interest rates at record lows, 2021 could be an ideal time for buyers to get in the California market. And, with average rents hovering at two thousand dollars and up, and programs available for lower down payments, it’s easy to see how buying a home sooner rather than later will save you money while building equity at the same time. At the end of the day, a home is an investment, especially here in California, but it is also much more than that: it is the place where your family can feel safe and protected from whatever life in the outside world brings us next.
If you are ready to make a move, we are here to guide you with over forty years of collective real estate experience in the North Bay area. Call 707-322-2000 or email firstname.lastname@example.org