California – and the entire nation – is in the midst of a housing crisis, putting a strain on potential homebuyers as they fight for limited inventory on the real estate market. According to data from Trendgraphix, inventory across Southern California dropped 72.8% year-over-year in May 2021, with only 0.8 months of inventory. For reference, in a neutral or balanced real estate market, there is usually 3 – 6 months of inventory.
This intense seller’s market categorized by extremely low supply and high demand was created by several long-term, as well as short-term factors. Since the Great Recession, homebuilders have been cautious and builder fewer homes than in decades past, and the trend of aging in place, as well as the success of rental sites like Airbnb and VRBO, has contributed to a tightening of available homes for sale over the years.
Most recently, the pandemic, Millennials reaching prime homebuyer age, and Federal foreclosure protections have kept inventory even tighter. But, with more and more Californians receiving the COVID-19 vaccine and feeling safe once again, housing inventory is expected to rise significantly this summer and fall.
Several agents have been experiencing the built-up to more inventory hitting the market as well, including top-producing FirstTeam agent Matt Tilley, affectionately known as The British Bloke, from our Long Beach Office. “I’m currently speaking to 10 home sellers all looking to do something within the next 3 to 4 months. There definitely seems to an uptick in inventory and I think there are several factors at play,” explains Matt. “People are noticing what their neighbors’ homes are selling for and are excited about what their home is worth, and with the vaccine rollout speeding up, more people are becoming comfortable with the idea of letting strangers into their homes as well as viewing other homes. People who were put off from selling in 2020 are now ready to list.”
Antony Bitar, Assistant Manager of our Seal Beach – Rossmoor office has also noticed the build-up and subtle changes in the market as well as we head into summer.”I’ve spoken to 2 photographers who work with the majority of the agents in our office for their listing photos, and both said they are busier than ever taking listing photos of new properties that are being prepped for the market.”
California real estate predictions for 2021
According to the most recent economic forecast from the California Association of Realtors, the housing market is doing unseasonably well in 2021. With lots of buyer demand amidst all-time low rates, these rates are expected to continue to fuel price growth. The forecast points towards an increase in existing single-family home sales by 11.2% in 2021, with the median home price predicted to edge up 8% in 2021, following an 11.3% increase in 2020.
