Facing the double impact of high house prices and high mortgage rates, many potential buyers are waiting for prices to drop before entering the market, resulting in an unusually slow spring home-buying season this year. As we enter June, despite house prices remaining high as usual, many areas are shifting towards a buyer’s market with transaction prices falling below list prices.
California’s real estate market has always been one of the most sought-after locations for homebuyers, but the recent surge in house prices has been hard to withstand. According to the latest report released by the California Association of Realtors (C.A.R.) on June 18, the median house price in California slightly fell in May but still stood at a historic high of $900,000. In comparison, two years ago in May, the median house price in California was around $800,000.
Moreover, during the June meeting, the Federal Reserve decided to maintain the interest rates steady, keeping the federal fund target rate within the range of 4.25% to 4.5%. Freddie Mac data shows that in the week ending on June 18, the average 30-year fixed mortgage rate was 6.81%, and the average 15-year fixed mortgage rate was 5.96%.
While unable to change the current high interest rates and house prices, Heather Ozur, a real estate broker in California, observed that the increase in housing supply will alleviate the pressure on rising prices. With more homes coming onto the market, prices are stabilizing, providing more room for negotiation.
“The continuously increasing housing inventory means buyers have more choices. This is a rare opportunity for people to find their ideal property at a reasonable price,” she said. She believes that for buyers with rigid needs, the current situation is an “ideal time” to purchase a home.
A recent report by the real estate brokerage company Redfin also found that most areas of the housing market are shifting towards a buyer’s market. With a continuous increase in newly listed homes, buyers have more room for bargaining.
The report suggests that currently only 28% of homes in the U.S. are selling above the listing price, the lowest level during the same period since the pandemic in 2020. In contrast, in 2022, more than half (53%) of homes were sold above listing prices during the same period, with multiple buyers competing and raising prices.
“For many Americans, buying a home remains challenging,” noted Chen Zhao, the economic research director at Redfin. “However, buyers should see that sellers are making concessions to close deals, accepting offers below the asking price.”
He further stated, “Especially for those not in a hurry to buy a home, not confined to specific areas, and more inclined to look for renovatable properties, they have more room for negotiation. Buyers should negotiate with sellers, and if the sellers are unwilling to meet their requirements, they can consider buying other properties.”
On the seller’s side, Redfin found that the number of new listings in the U.S. has increased by 5.2% compared to the previous period, indicating an oversupply of sellers in the market. However, it is worth noting that mortgage applications for home purchases have increased by 10% from the previous quarter, suggesting that home sales for available properties may rebound soon.
The sluggish state of California’s housing market also reflects a shift towards a buyer’s market. In May, the average time for a single-family home to sell in California was 21 days, compared to just 16 days in May 2024 to complete a transaction.
Additionally, after seasonal adjustments, the total sales volume of existing single-family homes in California in May was 254,190 units, a 5.1% decrease from April. Despite the decline in sales volume, the total number of active listings in May increased nearly 50% year-over-year and maintained double-digit growth rates over the past 15 months.
House prices in California are more than double the national average. Within the state of California, there are extreme price discrepancies between different counties. For instance, the median house price in the most expensive areas can reach $2.2 million, while in some remote areas, the median house price is below $300,000.
※(This article is provided for general reference purposes only and does not constitute investment, tax, legal, real estate, or financial planning advice.) ※