How Californians Feel About the Real Estate Market (January 2021)

JANUARY 2021 CALIFORNIA HOUSING SENTIMENT INDEX

Each month C.A.R. surveys 1,000 California consumers regarding their sentiments about various aspects of the housing market or the economy that directly impact housing to create a California Housing Sentiment Index.

The results of the individual indicators are combined into an equally – weighted diffusion index (where anything over 100 represents a net positive sentiment across the indicators, and anything below 100 represents a net negative sentiment). car.org/marketdata

Despite the information, opinion, and statistics that Realtors give to show you the conditions in the real estate market, how you feel about it is what counts.

Nevertheless, I’ll be providing the sentiment of 1000 Californians about various housing indicators.

(We did this last September if you’d like to see how things compare over the past few months.)

Here’s How 1000 Californians Feel About the Housing Market Right Now

Overall, consumers are feeling less confident (HSI* of 74) about the market, a 6% drop compared to the September report (HSI of 80).

Question: Is it a good time to buy a home?

 Poll Results: 25% say yes, now is the time to buy, and 75% think this is not a good time to buy. That’s down 2% from December 2020.

Our Take: We wouldn’t say it’s a bad time to buy, it’s just more challenging to find what you are looking for. Inventory is very low which is frustrating to buyers. Yet, interest rates remain historically low so affordability is very high. Home listing prices continue to rise, so waiting can get expensive.

Lower confidence means fewer people are shopping for homes, so competition between buyers is lower as well. So, it’s 6 of one, half a dozen of the other. Buyers who are determined to buy will be successful.

Question: Is it a good time to sell a home?

 Poll Results: 59% of Californians think this is a good time to sell a house. That’s an increase of 1% over the September 2020 poll.

Our Take: Definitely yes! Demand is strong right now. Buyers are fighting over available inventory and homes are selling fast at or above the asking price. Again, interest rates as so low that more people are able to afford to buy right now. If you’re thinking about selling, this could be the perfect time for you.

Question: Will it be easier to find a home over the next 12 months?

 Poll Results: 40% of respondents think it will be easier to find a home in the next year, while 60% don’t think it will be easier. This metric has not changed since September of last year.

Our Take: We hope so but are cautious about saying that it will be easier in the next year. The market always fluctuates, and that is difficult to predict. So I guess what I’m saying is that we think it will be easier to find a home as time progresses, more people are vaccinated from COVID, and more people get back to work.

Question: Do you plan to purchase a home in the next 12 months?

 Poll Results: Only 8% said they plan to buy a new home in the next year. Again, that hasn’t changed since the September poll. That leaves 92% that don’t plan to buy in the coming 12 months.

Our Take: You probably know that people only buy or sell about every 7 to 10 years, so we wouldn’t expect this number to be very large. If you consider that Contra Costa County has a population of 1,160,920, then 8% of that would be 92,873 buyers. That’s a pretty large pool of would-be buyers. I don’t think even Libby and I could handle that amount!  Even with Brittany and her team.

Question: Will home prices rise in the next 12 months?

 Poll Results: 51% of those who responded think home prices will go up in the coming year. That’s down 2% from our previous report. So 49% don’t think home prices will rise over the next year.

Our Take: Prices have continued on a steady increase in our area.  Prices will continue to rise in the next year and for the foreseeable future. Although the median list price has tapered off slightly, the median sold price continues to be above the asking price.

Sale-to-List Price Ratio: 101.87%

Homes in Contra Costa County, CA sold for 1.87% above asking price on average in December 2020. ~Realtor.com

Question: Will overall economic conditions improve in California in the next 12 months?

 Poll Results: At only 32%, 7% fewer say yes than September 2020, the economy will improve in the next year. 68% still don’t think so.

Our Take: This of course depends on your current circumstances. Your personal economy might be fine right now. (We hope it is!) As the vaccine is distributed, and they (hopefully) ease restrictions, the economy should start to rebound. We are taking a positive approach to this and predict that for most, the economy will improve in California in the next year.

Question: Will interest rates fall in the next 12 months?

 Poll Results: 44% say yes, interest rates will drop while 56% of pollees think they will not go any lower. An increase of 5% for the noes.

Our Take: Rates are so low right now, we expect them to stay pretty flat for the time being. Interest rates always fluctuate, just as the real estate market does. We don’t see huge changes ahead in the coming year. Just for your information, we have placed the current rates for this week below. The average 30-year mortgage is at 2.89%. If you recall it was 16.63% in 1981!

All the interest rates in the chart below are lower than in September of 2020, so who knows. 🤷🏻‍♂️

Conclusion

With the drop of housing sentiment from 80 to 74, Californians are more pessimistic about the market since our last report. However, we are not. Overall, we think 2021 will be another good year for real estate.

As always, your experience will vary. These stats are just an indication of what 1000 people think, and with our take on things, we hope you have a more positive outlook on the year.

Regardless of your goals for this year, we suggest you read our latest article Set Homeownership Goals Whether You’re Buying, Selling, or Staying Put

Also, we would love to know what you think about the housing market and the economy for 2021. Please leave your comments below or on our Facebook page.

* Housing Sentiment Index