September 17, 2020
The combined effects of the coronavirus pandemic and record-low mortgage rates have created a perfect storm for home sellers’ asking prices to surge.
The median price for a home in California currently sits $187,000 above the average from the beginning of the year, equating to a 34% asking price increase. This number comes from a recent Zillow report which lists California’s statewide median at $735,000 as of September 5.
As for what created the substantial increase in asking prices for homes, multiple factors played a role. One cause of the median inflation is attributed to the business limit exemptions home sales were given in early spring of this year. Another factor is the increased interest in suburban homes over apartments or other smaller housing units, credited to the current work-from-home situation most Americans are experiencing. The coronavirus pandemic also created an insecurity in housing inventory, which has yet to fully recover; and with far more buyers in the housing market than there are available homes, home sellers have been able to drive up their listing prices.
Recent record-low mortgage rates also had a hand in the higher median home cost. The federal reserve has acted aggressively in the pandemic to aid the housing market, and interest rates fell to a historic 2.86% just last week. This adds further fuel to fire in the market’s current competition, creating another incentive for buyers to act fast when homes are available.
Despite these seemingly harsh conditions for prospective home buyers, home buying in California continues to fare relatively well. As of September 5, new escrows were up 22% statewide in comparison to September 2019, an indicator that California’s housing market remains strong amid the coronavirus pandemic.
Marissa Saldivar // CIRB Journalism Intern // firstname.lastname@example.org