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Here's What You Need to Know About Southern California's Housing Market
Real Estate

Here's What You Need to Know About Southern California's Housing Market

Whether you’re moving to a new neighborhood or retiring, here’s all you need to know before investing in SoCal's real estate market.

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5 min read

May 11, 2021

You’ve compared the cost of living in NorCal and SoCal, learned all the secrets behind California’s real estate market, and decided whether or not you’re buying or renting. All that’s left to do is pick your ideal spot and learn everything you need to know about Southern California’s housing market. Easy peasy right? Well, not really. 

Don’t start panicking just yet, though. Whether you’re moving to a neighborhood for young professionals or retiring to a scenic beach town, here’s all you need to know before investing in Southern California’s real estate market.

Year over year, prices and home sales are up in SoCal. Despite the economic problems, the housing market continues to thrive.

Unique characteristics of Southern California's real estate market

The Southern California housing market has endless qualities which attract prospective homebuyers. Warm weather, pristine oceans, and shopping destinations—SoCal has continuously matched its effortless lifestyle with luxury and location. Home to some of the top cities, each area in SoCal has its own charm and appeal. Every city offers a different price range, drawing buyers for a variety of reasons.

Buyers that prefer living in a quiet, secluded neighborhood with access to nearby shopping amenities choose Pacific Palisades. The seaside community attracts those who admire scenic vistas, privacy, and upscale cafes and boutiques. 

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Looking for mountain views and a serene ocean scene? Malibu is the place for you. This highly sought-after gem is quiet, calm, nature-centric, and the perfect place to raise a family. For a bit of an urban, young feel, Santa Monica is the place to be. Head to The Strand and check out the skateboarders, bikers, and joggers doin’ their thing. The one distinctive quality that the Southern California housing market shares is location, location, location.

Besides prime location, other factors that attract buyers include ideal weather, price and value ratio, and expanding business opportunities. You might be wondering “When did Southern California house prices become an attractive quality?” and you’re right. The average house prices in Southern California are definitely higher than the other U.S. locations. But, compared to other top cities in the world such as New York and Hong Kong, you’ll get a better deal in SoCal. 

For starters, you’ll have more privacy and larger lot sizes in SoCal. While this doesn’t justify the costly real estate prices in Southern California, it’s still less far-fetched than in other major cities. 

While mortgage rates in Southern California are at historic lows and the demand for homes has increased, the rental market looks very different.

SoCal's Housing Market trends

The Southern California real estate market is booming with a surge in home sales and prices. Yes, even after the pandemic. In fact, since 2012, Los Angeles' median home values have nearly doubled. Here are the changes to expect in the Southern CA real estate market in the upcoming year:

  • Zillow predicts that home prices will rise by over 10 percent
  • There’s an increasing desire for a larger second home for repeat buyers
  • The CAR's (California Association of Realtors) forecast predicts a modest 3.3 percent increase in existing single-family home sales
  • Due to the pandemic, the supply of houses on the market decreased by 20 percent in 2020. The percentage is expected to stay low in the coming year, pushing home prices even higher

 

We’re not psychic, but if a pandemic couldn't slow down Southern California's housing market, then nothing can. 

Average house prices in Southern California

In the Greater San Diego region, January started strong for the housing market, with healthy buyer demand and strong market fundamentals.

San Diego Housing Market

Median home sale price: $682,000

Median days on the market: 17

The median home sale price in San Diego is lower than the other average house prices in Southern California. Some experts are predicting a slump in home sales in 2021. But, the steadily growing economy and increasing number of homes for sale have proven to be a great window of opportunity for buyers. This also makes it a good time to buy property in San Diego. 

For people who already own property in San Diego, CAR shows that home values are also increasing in comparison to last year. 30-year fixed-rate mortgage rates are also currently very low. In September 2020, the rate was 3.56 percent. While that’s not the all-time low, it’s pretty close to it, especially in comparison to September of 2019, which was 4.6 percent. Even if you know everything about the California housing market, it’s still a constantly fluctuating world with massive overnight shifts, so always keep abreast of the changes.

The O.C. housing market continues its torrid pace in 2021, hitting record numbers in luxury home sales last year despite the pandemic.

Orange County Housing Market

Median home sale price: $800,000

Median days on the market: 43

When it comes to increasing prices across the Southern California real estate market, Orange County is no exception. Partly thanks to work-from-home procedures, more people are moving to sunny seaside communities, further fueling the region’s market.

If you’ve been eyeing Orange as a potential SoCal county to move to, don’t lose hope at the sight of soaring prices just yet. Affordable housing in Orange County is still a possibility, and finding your perfect home fit is just a matter of time. But with low supply and interest rates, housing demand will continue to be hot—don’t wait for a sudden drop in prices anytime soon.

In Los Angeles County, the median sales price rose 14.3 percent to $708,500 in February, while sales climbed 19.1 percent.

Los Angeles Housing Market

Median home sale price: $820,000

Median days on the market: 50

The Los Angeles housing market is at the forefront of national recovery. Regarded as one of the world’s most desirable cities to invest in, the City of Angels has been garnering worldwide attention for a while now. Not only does it significantly feed the Southern California housing market, but it also weathered the pandemic storm relatively well.

Pent-up demand and historically low-interest rates captured the attention of many investors in 2020. The median home price was $802,700, while average rent prices hovered around $2,355. In fact, the pandemic created a window of opportunity for buyers, sellers, and investors, despite the decreased number of houses on the Southern CA housing market. This also secured Los Angeles as one of the best places in California to get a rental property (your home will basically never lose value).

Expanded opportunities to work from home, low inventory, and interest rates are driving factors of the Santa Barbara housing market.

Santa Barbara Housing Market

Median home sale price: $1,495,000

Median days on the market: 50

Thanks to remote jobs, people are choosing to call this SoCal paradise their home. People no longer have to live in close proximity to their workplace (now that’s freedom). Low rates, high demand, and shallow supply are all contributing factors to this ever-growing Southern California housing market. Not only are homes being sold in Santa Barbara but as of June 2021, Santa Barbara home prices were up 50.9% compared to last year, selling for a median price of $1.7M, according to Redfin's Santa Barbara stastics.

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