Survey Reveals California Home Buyers Expect Lower Home Prices. But Are They Dropping?

June 23, 2020

A person standing with their back to the camera, reviewing sketches and notes on a whiteboard while holding papers, representing planning and strategy development.

On June 3rd, the California Association of Realtors (CAR) released survey data sampling California agents and their clients over the last week of May. The results revealed the majority of buyers expect home prices to be lower while only a small number of sellers are reducing their listing prices.

California survey chart: 63% of buyers expect lower prices, while 17% of sellers reduced their price.

In the long run, who is right will depend on how long the economic recovery takes. In the short term, however, the data tells us that single-family home buyers appear to have wishful thinking, while condo buyers appear to be correct. Begging the question, is now the right time to purchase a condo?

Condo prices saw a decline of almost 9% from April to May. Line chart comparing San Francisco single-family and condo median prices from February through May 2020.

Compared yearly, prices were down for both single-family homes and condos. Single-family home prices were only down by 3% in May year-over-year. The more volatile condo market reported double digit declines compared to last year and have been trending down since February.

Chart of San Francisco home price changes, showing May declines of 3% for single-family homes and 11% for condos.

The year-over-year price decline was the first in San Francisco since the pandemic began.

Should homeowners be worried?

Not really. Evidence supports the idea that price declines will only be in the low single digits for the 2020 calendar year. The market continues to see a larger sell-side impact, meaning that housing supply has declined more than buyer demand.

In May, California mortgage applications for home purchases (as opposed to refinances) rose significantly from April and are only down 1.7% from this time last year. Mortgage applications correlate with buyer intent to purchase a property and indicate the number of homes under contract and home sold.

Chart comparing year-over-year home purchase mortgage applications in California and the US for two weeks in May 2020.

All of this is welcome news. The May data assures homeowners that their home equity is still intact as restrictions begin to lift. It should also encourage buyers who may have been delaying a home purchase to enter the market, especially those interested in condominiums.

With home prices dropping for San Francisco condos take a look at these recent listings. Have a question or looking for something in particular? Drop us a line.

 

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