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Ask any Californian why the Golden State is the best place to live, and they’ll tell you three things—sunshine, beaches, and food. While California burritos and beautiful places like Santa Monica State Beach are solid reasons to move to California, there are a few things you need to keep in mind, including the cost of living and California’s housing market.
As dreamy as it is to live in the Golden State, everything comes at a price. The amount of expensive cities in California are just as many as the affordable places. Whether you want to invest in a rental property, move to a metropolitan area, or simply buy your first home, here’s what you need to know about California’s real estate market before making any decisions.
California makes up a considerable amount of the nation’s housing market. The state managed to not only overcome a struggling economy, but also successfully record solid sales during one of the most difficult financial times in history. The average house price in California in 2020 was $617,633—it’s expected to increase to $648,760 this year. The median rent price is somewhere between $1,400 to $1,600.
Since the Golden State is one of the most coveted places to live in the U.S., California’s housing market is still competitive even during the off-season. Many houses are selling in a short amount of time with little to no price reduction—some sell for much more than the asking price. One might even say there aren’t enough properties listed to appease buyers’ demand.
Despite the high cost of living and skyrocketing home prices in the Bay Area, people are still relocating there due to the booming tech industry. Thanks to the abundance of rewarding job opportunities, the Bay Area housing market continues to flourish—it has remained resilient during times of adversity.
The Bay Area had the highest real estate sales in California with 34-percent growth—all nine counties experienced double-digit growth. Today, the average home price in the San Francisco-Oakland-Hayward Metro Area is $1,158,018. The median rent price, on the other hand, is around $3,000. While it’s doing pretty well overall, the Bay Area real estate market has undergone some change due to the COVID-19 pandemic. Many residents have turned into commuters and moved to inexpensive Bay Area cities. With a cheaper cost of living and gratifying salaries, they’re able to afford housing in the region’s less expensive neighborhoods.
The San Francisco housing market may have faced a few setbacks, but it’s still going strong. Despite properties getting fewer bids, residents relocating faster than before, and houses sitting on the market for too long, the median price for a single-family home was a whopping $1.6 million towards the end of 2020.
Although the City by the Bay is one of the most expensive housing markets in the Golden State, it experienced a conspicuous decline in rent. Compared to the previous year, San Francisco’s rent prices dropped 24 percent, with the average one-bedroom apartment costing around $2,600 a month. The two main reasons for the downward trend are outward migration and remote jobs.
Thanks to its strong tech presence, San Jose’s housing market has become increasingly competitive. The third-largest city in the Golden State has not only the highest cost of living in any area in the nation, but also one of the most expensive housing markets in the United States. The average rent is $2,450.
San Jose is a strong seller’s market. The median home price is $1,116,087 and most houses sell in fewer than 20 days—many of them get several offers, some with waived contingencies. Hot homes on the market are listed for around 7 percent and typically have a pending sale within a week.
Oakland, the “bright side of the Bay,” has also proven to be a seller’s market for the past 10 years. Not only did the Oakland housing market come a long way in a relatively short amount of time, but it also managed to lure in S.F. residents and make them move to the East Bay.
While Oakland’s median home value was $801,072 and the average rent price was $3,000 in 2020, it’s still considerably more affordable than S.F. and San Jose. With more people moving here to maintain the Bay Area lifestyle, Oakland’s housing market has shown to be a great place to invest in rental properties.
Multiple reports have shown that the Sacramento housing market is expected to be the strongest in 2021. The average home value last year was $395,58—significantly lower than that of the Bay Area’s. Most homes in Sacramento get several offers usually with waived contingencies and sell for 2 percent above the list price. Hot homes can even have a pending sale in less than a week.
Many Bay Area residents are choosing to become first-time homeowners and making the move to Sacramento. Due to the remote nature of their jobs, people are able to live anywhere they want without breaking the bank. Sacramento neighborhoods like Elk Grove, Oak Park, Tahoe Park, Arden-Arcade, and West Sacramento are among the top choices. And the average rent price? It’s only $1,529. With so many advantages to offer, the Sacramento real estate market has proven to have a lot of potential.
Breaking into the Santa Barbara housing market is a deluxe commodity. Despite the median home price of $1,248,479, there’s still a high demand for luxury homes here. Even the COVID-19 pandemic didn’t stop the market’s growth—many houses received multiple offers well above the asking price. Most of the houses sold were used to invest in rental properties. The average rent price is $2,129.
The idyllic city of Santa Barbara is one of the fastest-appreciating markets in California. Not only are interest rates on traditional loans historically low, but the inventory shortages will increase rental demand—this will lead to rental property investors benefiting from Santa Barbara’s housing market.
Although the Los Angeles housing market encountered multiple obstacles in 2020, the City of Angels remained at the forefront of not just a national recovery, but also a global recovery. Despite the setbacks due to the COVID-19 pandemic, the negative impacts created a window of opportunity for people looking to buy, sell, or invest in properties.
Pent-up demand along with historically low interest rates captured the attention of investors around the world. The median home price was $802,700 in 2020, while average rent prices hovered around $2,355. While most places faced economic struggles, the Los Angeles real estate market thrived by stirring up a lot of activity.
Home prices are increasing across the Southern California housing market, and Orange County is no exception. The SoCal paradise is creating a seller’s market after rebounding from the global pandemic—there are more people looking to buy than there are homes available. Average home prices were around $804,900 in 2020 and are continuing to rise. The median amount of days a home is on the market is 61.
As for rent prices, they remain consistent and average around $2,000 a month. The ever-expanding and evolving Orange County housing market has shown to be a successful area to invest in. Despite the increasing home prices, there are still plenty of inexpensive cities to live in Orange County.
The San Diego housing market is no exception when it comes to increasing home prices and sales. While there was a decline in sales during the spring and early summer buying season, it only led to pent-up demand, causing an exceptional sales growth in the winter. Even though home prices have started to plateau, the San Diego real estate market remains a hot seller’s market.
The average home price here is not as expensive as it is in other popular SoCal cities—it was only $730,048 in 2020, which is less than the average home price in places like Santa Barbara and Huntington Beach. Meanwhile, the median rent prices were $2,180 last year, a 2 percent decrease compared to 2019. With plenty of affordable places to live in San Diego, California dreamin’ in this SoCal city is completely possible.
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