Is California’s housing market finally cooling off? Here’s the latest data on home sales and prices

The Bay Area and California housing markets could be slowing from the rapid pace during the pandemic, new reports show — though prices are higher than ever.

Three reports from various real estate companies and associations each noted that April sales activity in the Bay Area and California slowed compared to March and year over year. That could indicate the market is cooling off after hitting some of the highest levels in over a decade in recent months.

Factors driving the trend include higher interest rates and prices that are increasingly unattainable for buyers, the report said.

“California’s housing market is weakening from 12-year highs in 2021 as higher mortgage rates and rising home prices begin to have a negative impact on housing demand,” Jordan Levine, vice president and chief economist of the California Association of Realtors, said in the sales and earnings report April 2022 Group Pricing Report.

The Real Estate Association found that the nationwide pace of sales in April, as measured by the number of homes sold, fell 1.9% compared to March and 8.5% year-on-year — the largest year-over-year decline in recent years four months, the report said. According to the report, April sales in the Bay Area slowed even more than the national average, down 18.1% in a year. Only the Central Coast saw a larger year-over-year decline of 21.3%.

“With home sales due in April posting their worst drop in two years, the affordability challenges buyers have encountered are materializing in recent sales trends, and a further decline in home demand could continue into the second half of the year,” Levine added.

At the same time, however, the report found that prices are higher than ever due to a mix of factors including an overall low housing stock, inflation and an increasing proportion of high-end homes being sold in the market – a Trend expected to continue in the coming months.

The real estate association noted that the average home price in California in April broke March’s record, hitting $884,890 — up 8.7% from April last year. While this year-over-year increase was the smallest since June 2020, it still represented a new record high for the state.

The shifts in sales activity and pricing are subtle and reflect a changing but not collapsing housing market, brokers said.

“While many real estate pundits are predicting an impending crash in the Bay Area real estate market, they seem a bit hasty with their gloomy predictions,” said Tim Yee, president of real estate firm RE/MAX Gold Bay Area, in a review report. But, he added, “rising interest rates, unrestrained inflation and consumer confidence are all helping to level out Bay Area markets, which is particularly noticeable in the last two weeks of April and the first week of May.”

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