The Deauville East community by Granville Homes is seen in this screenshot from Clovis.
Written by The Business Journal Staff
Last year was a rollercoaster ride for residential real estate. Following a strong state of low inventories and affordable interest rates, spring threw everyone for a loop when buyers, sellers and realtors had to figure out how to do business in the midst of a pandemic. Skyrocketing home prices and record low interest rates created a market favorable for both buyers and sellers that continues. Here are a few different angles looking at housing data in the Central Valley throughout 2020.
A frozen spring, a white-hot closing
Statewide, the California housing market ended 2020 strong and despite a short lapse in spring following lockdowns, the year ended with double-digit gains in home sales. Central Valley counties each experienced double-digit, year-over-year median price growth and total sales of their own, according to data from the California Association of Realtors.
Leading the pack of the four Central Valley counties in terms of total homes sold was Madera, selling 35.6% more homes in 2020 than in 2019. The median home price also increased 17.5% year-over-year to $335,000 from $285,000 in 2019.
Kings County trailed Madera County, increasing the number of homes sold by 28.2%, according to the same data. Homes there increased in price by 10.5% on average to $281,750 from $255,000.
Fresno County followed, with 9.2% more homes sold. Though not a double-digit increase, home prices did increase 14% year-over-year to $325,000 from $285,000.
Tulare County home sales fell behind Fresno County by only a tenth of a percent, coming in at 9.2%. Median home price increases nearly caught Madera’s, averaging 17.1%to $295,000 from $252,000.
All four Central Valley counties surpassed California’s statewide home sales increase of 3.5%, based on preliminary data. Across the state, 411,870 homes were sold compared to 397,960 in 2019.
December sales slip year-over-year, prices grow
December home sales dropped 3.2% in Fresno compared to December 2019, according to data from Hawkins Team at Realty Concepts. Throughout the month, 460 homes were sold compared to last year’s 475.
Average selling price per square foot, however, increased 12.4% to $191 from $170 in December. Median sales price increased to $301,000 from $259,000, showing a 16.2% increase. Average days on market dropped 52.9% to 16 days in December from 34 in 2019.
Number of young homeowners grow
The number of young people buying homes has declined 3.71% on average since 2009 across 200 cities, according to Smartasset.com, analyzing home ownership rates between 2009 and 2019. Fresno, however, broke the trend and showed an increase of 2.09% for homebuyers aged between 18-34 years old. Fresno ranked No. 43 of the 200 cities in the study. In 2019, the homeownership rate for residents aged 18 to 34 was 24.92%, compared to 22.83% in 2009. Smartasset.com combined the 2019 homeownership rate for young people with percentage change over 10 years to come up with the rankings. Bakersfield actually was No. 5 in the nation, showing a 10% increase from 2009 over ten years. 39.75% of residents aged 18 to 34 owned homes.
List versus asking price didn’t vary much
Fresno is still faring well among national markets — ranked No. 22 in median price change for January.
Home prices sellers asked for only had to drop 2.42% on average to get a buyer to bite, putting the Fresno market in the top 25 markets across the nation, according to RealtyHop.com. That percentage rounded out to an average $10,000 drop in the listing price. Taking the top spot was Chandler, Arizona, where the median price change dropped 1.8% for an average $9,000 change from prices.
RealtyHop surveyed 300,000 home listings nationally to rank the top 100 realty markets in the United States.
Rental values climbing; Fresno mortgages outpace
Across the nation, home prices are accelerating faster than rents in 80% of the U.S., according to Attom Data Solutions. But mortgages prices are still considered more affordable in 63% of markets, which is especially true in more rural areas, and Central Valley counties are taking note in some statistics.
Of the 94 counties nationally with populations between 500,000 to 1 million, Fresno County ranked among the top five counties where renting was less expensive than buying. The other counties included in the list were Honolulu County, Hawaii; Westchester County, New York; Collin County, Texas; and Fairfield County, Connecticut.
Low rates, younger buyers
Several indicators have given cause for optimism in the housing market, according to Josh Stech, CEO of Sundae.com, an off-market home listing website.
Realtors will attest to the adrenaline rush record-low interest rates gave to the housing market following sudden, dramatic drops in employment. Those rates don’t look to be changing as the Federal Reserve said it would keep rates low until 2023. This is one indicator that 2021 will be a strong market, according to an analysis written by Stech. Low rates in 2020 helped buoy home sale transactions even as average home prices increased by double-digit levels.
Millennials are beginning to defy the stereotype that they will live in their parents’ homes forever.
In 2011, 30-year-olds made up around 20% of all mortgage originations, said Stech. In the third quarter of 2020, that number neared 30%. In response to appreciation in home values, the Federal Housing Authority increased the limit on loans it issues, which can be very popular for young people. President-elect Joe Biden has also proposed a $15,000 tax credit for first-time homebuyers, said Stech. These opportunities can put more buyers into the market.
Nationally, home equity levels are also increasing. The market value of real estate assets held by households totaled $31.2 trillion, compared to existing liabilities totaling $10.8 trillion. This means homeowners’ equity equaled $20.4 trillion, or 65% of household real estate values. Property values rose while mortgage debt levels remained stable.
“Combined with low interest rates, rising home equity will propel sales activity in higher price ranges and markets popular with retirees,” said Stech. Increases in home equity also insulate the housing market by allowing homeowners who fall behind in payments the ability to sell at a profit rather than being left with foreclosure or short sales.