The California real estate market is unique. With the tech boom, earthquakes and wildfires, and a push for energy efficiency, people are asking what is happening to home prices on the west coast. They’re searching online to find the answers to the following questions about the market, so we’ve looked at the real estate trends in California and put together everything you need to know about the state of the market.
Top Questions about California Real Estate:
- What’s happening in the Bay Area real estate market and why are homes so expensive?
- How do extended periods of wildfires impact home prices?
- What are PACE Loans, and what green improvements should I invest in to increase my home value?
- Are San Franciscans really moving to Sacramento to become commuters and bringing high home prices along with them?
- Finally, what does it take a sell a home quickly and for the most return in California?
Median House Price Comparison by Major California City:
(ranked highest to lowest in Sept 2019)
|1. Mountain View||$1.74M|
|2. San Francisco||$1.3 MM (for a 1,600-sq-ft home)|
|3. San Jose||$991.2K|
|6. Los Angeles||$689.7K|
|7. San Diego||$634.6K|
|8. Long Beach||$599.4K|
Interesting cross-metro home listing search trends:
- Some 35%of would-be renters and buyers doing online searches in Sacramento are from out of the area, a Zillow analysis shows, and the number one origin site is San Francisco.
- 43% of people searching for houses in Riverside County are from Los Angeles
- 37% of nonlocal searches for San Jose homes on Zillow are from San Francisco
FYI: California cities home prices have stayed stagnant over the last 12 months
The Bay Area and Silicon Valley home prices haven’t increased in the last 12 months, and Southern California cities like LA and San Diego are also seeing slow growth (3-4% increase in the last 12 months) coupled with a slow growing job market. The slight increase just occurred in July due to lower mortgage rates.
Takeaway for buyers and investors: With high home prices in a sideways market, sell before the bubble pops but be cautious about increasing the sales price too significantly. Caution in pricing is key within these once booming markets because the ceiling has already been hit.
Three things you probably didn’t know about California wildfires and how they impact the real estate market.
- The wildfire prone areas are expanding, raising 10% from 2016 to 2018. With more fire risk neighborhoods, there are more homes in need of insurance coverage, which is mandatory in order to secure a mortgage.
- Insurance costs have increased dramatically, no longer covering 100% of a home’s fire damage. The drop in coverage and major policy changes have made homes in wildfire prone areas harder to rebuild, therefore making them more difficult to sell.
- Home listings will spike after a fire, as will listing views, and home prices. Homes that were not damage in markets affected by wildfires can be priced higher because of the demand from buyers with damaged homes or buyers looking for areas that were saved from destruction in the last fire.
What You Need to Know When Selling a Home in California
Since our launch to California, we’ve learned a lot about what it takes to sell your home in a timely and pain free manner in the Golden State. From getting your home listed on the market quickly, to understanding the nuances of each city’s market, to required documents and contracts for closing, we’ve got it figured out.
Should I Invest in Green Home Improvement Before Selling? What is a PACE loan?
Property Assessed Clean Energy (PACE) Loans give homeowners the funding for clean energy improvements. Common energy efficient home projects can include solar panels, heating and cooling, and landscaping that conserves water use. These home improvements can increase your home selling power, increasing its worth and desirability for green buyers.
The loan can be sold with your home to your buyer. Note that buyers may not want these features, or to take on this loan. Make sure to highlight the benefits of these energy efficient features, so that the buyer sees them as an asset rather than an unexpected burden. Since PACE loans are still somewhat new, keep in mind that most lenders won't lend on a property with this type of loan unless paid off at escrow.
Should I Test My Home for Electromagnetic Field Radiation?
Home buyers are becoming more and more concerned about electromagnetic field radiation (EMF); specifically from powerlines and cell phone towers nearby the prospective home. While this is not a new concern for Americans, and the California market is not necessarily at a higher risk, the increased amount of man-made electromagnetic fields have increased drastically – think Bluetooth, 5G speed internet, and wearables. Best to be aware that you may be asked about it as it continues to be a trending topic online, and it never hurts to have your home tested before going to market.
Making an Offer on a Home in California
Here’s a play by play on how to make an offer.
- Unlike other states, home buyers in California can put time limits on their offers directly in the contract. The home seller checks "Acceptance is subject to attached counter offer" on the original agreement when making a counter.
- Sellers can send out multiple counter offers. Buyers accept, but the seller gets the final signature. This puts sellers in control and able to counter to multiple offers at once. This adds an additional level of negotiation power when in a multiple offer situation.
- Contingencies are removed with the "Contingency Removal" Do not assume that because the date stipulated in the contract has passed that a contingency has been removed. Seller must receive the contingency removal form from the buyer.
- 4-5 days before the end of escrow, the buyer will do the final walk through. There is a specific document that the buyer will sign off on once the property has been inspected.
If you’re selling a home in California, it’s best to aware of new opportunities like energy-efficient improvements or disadvantages to selling a home in a wildfire risk zone. Send us a message and connect with an agent if you have any other questions or want to get started on your home selling journey here.