Do you want a house in California? It will probably cost you more than $900,000.
The statewide median sales price of a previously owned single-family home surpassed $900,000 for the first time in April, a shocking figure that underscores how unaffordable housing has become across the Golden State.
April's median of $904,210 is 11.4% higher than the same month a year ago, according to data from the California Association. of Real Estate Agents. The median (the point where half of the homes sold for more and half for less) has now risen more than $100,000 in just over two years.
That increase in home prices comes even though mortgage rates are sky-high relative to recent memory. Last week, the average rate on a 30-year fixed mortgage was 7.02%, more than double the 3% or lower rates seen during the COVID-19 pandemic, according to Freddie Mac.
High prices and high rates have created the most unaffordable housing market in a generation, but economists say prices continue to rise because many homeowners refuse to sell and give up their sub-3% rates, creating an extreme shortage of inventory. .
Wealthy Californians also have hordes of excess cash that they can invest in down payments to help offset high borrowing costs.
If prices continue to rise at 11% annually, the median home price in California would exceed $1 million by 2025.
However, that may not happen.
In recent weeks, more homes have started to come on the market as some homeowners begin to decide that a new home is more important than a low rate.
Inventory remains extremely tight and economists don't expect the floodgates to open. But in Los Angeles, Riverside, San Bernardino and Ventura counties, total listings in April surpassed year-ago levels for the first time since the first half of 2023, with each county recording an increase of at least 5%.
Orange County was the only county to see a decrease, while in San Diego County, inventory has increased for two consecutive months and is 18% above what it was a year ago.
Some experts say the increase in supply probably won't be enough to drive down home prices, but it should cause values to rise at a slower pace.
That might mean that a median of $1 million is a little further away, but not by much.
“If we don't get there in 2025, we'll probably get there in 2026, barring a big slowdown in the economy,” said Jordan Levine, chief economist at the California Association. of Real Estate Agents.
