What a year that’s finally in our rear view mirror, eh? A year of ups and downs, possibly more of one than the other depending on your perspective. A year of political shenanigans and chicanery that’s just winding down for one administration and just winding up for another. New faces in DC and Sacramento, and even a few of you receiving this letter for the first time. If it is your first time, congratulations. I’ll be sending this local housing summary out every month with more information that you care to read. If you ever have any specific questions about some element of
our housing market, please don’t hesitate to contact me for details.
So, let’s not waste another moment. Despite a nearly two month shut down of our industry, 2020 posted the highest sales volume for our region since 2010! I know I forecast that we would come in above 2016 and just under 2017, but December sales volume blew past my predictions and brought us in 40 units higher than 2017 (11,685 / 11,725). Still a bit off the 2010 pace of 12,216 but given the fact that we are essentially out of inventory to sell, not a bad finish.
What a year it might have been if we had adequate inventory and a wide-open market!! Of course, without the COVID push and adequate inventory, prices would not have appreciated as they did either.
If you remember back to Q1, our year started off strong. In spite of the pull-back in mid-March, we were off to our best 1st quarter in years. With a very slow Q2 it was impossible to say where the market would be going. Our national Chief Economist was forecasting a V shape recovery for housing, but even he was hedging his bets. But once our market started to bounce back in June, we haven’t slowed down. We ended the year on a high note with December sales volume not only a 10% improvement over November (1,033 / 1,149), but fully 25% higher that last December (860).
Our median and average prices also ended the year on a surge. December median price was up a full 15% over last December ($385,900 / $454,500), pushing the year to a 9% appreciation over 2019 ($386,413 / $424,422) and more than double the regional median from 2010 ($198,862). Propelled by 134 sales of properties in excess of $1 million, Temecula established a new average price peak this year of $601,027, besting last year’s $555,320.
Murrieta posted 92 $million+ sales bringing their average price to $525,487, just $7,000 short of their record year of $532,902 set in 2008. Menifee and Perris also set new average price peaks this year while other cities pulled within a few thousand dollars of new records. Last year there were 174 sales in excess of $1 million, this year there were 259.
Obviously COVID was not a detriment to everybody.
Again, our scariest number is the inventory of homes for sale. With just 598 homes currently on the market, this is our lowest inventory ebb since December of 2012 when inventory dropped to 581 units. Back then we had 2 months where sales exceeded inventory, this year sales have exceeded available inventory for the past 7 months.
Buyers today have just 1/3 the inventory of homes to select from than last December (1,720). Rather than being measured in months, our inventory across the region is currently standing at just over 2 weeks. And we’re all aware of what happens when you have strong demand with very limited supply (see previous paragraph re: pricing).
So, what’s ahead for 2021? With interest rates continuing at record lows, urban and coastal buyers seeking larger homes with offices and classrooms, and Millennials increasingly entering the housing market, there are no prognosticators calling for any decline of the market in 2021, fueling the 12th year of our housing market run-up.
Of course, we’re also likely to continue the trend of nearly 60% of California sellers seeking greener pastures out of state, so that should help inventory a little. Our level of distressed properties, currently less than 1% of the market, may also be impacted as we see increased business closures. We are fortunate in our region that nearly 70% of our residents are homeowners. That means we’ll see less of an impact from eventual rental evictions and foreclosures than areas like Santa Monica, with just a 22% rate of homeownership. It makes a difference.
And, of course new policies out of D.C. and Sacramento will have an obvious impact. While we’re not yet sure of the direction the federal government will take, Sacramento has already sent down 2 bills seeking to extend the rental eviction moratorium through next December with no relief for landlords. Those sorts of things will leave a mark.
Well, here’s to you and yours for a healthy and prosperous 2021. 2020 hasn’t been all bad.
Gene Wunderlich is Vice President, Government Affairs for Southwest Riverside County Association of Realtors. If you have questions on the market, please contact me at GAD@srcar.org.