Median home prices are rising in all metropolitan areas across the United States. Pictured is a home for sale in Pasadena, California on April 24, 2020.
Home prices have risen sharply in all California metro areas within the past year.
The National Association of Realtors (NAR) recently released data for the first quarter of 2021 showing that median home prices are rising in all metropolitan areas across the country, with median home prices in California metro areas increasing by as much as 11 to 22 percent.
Of California’s major metro areas, Silicon Valley (including San Jose, Sunnyvale, and Santa Clara) saw the smallest increase in home transaction prices. Nonetheless, the region’s median home price reached $1.5 million in the first quarter of 2021, an increase of 11.1 percent from a year earlier. Silicon Valley is the most expensive housing market in the nation, according to NAR.
The San Francisco-Oakland-Hayward metro area near Silicon Valley is the second most expensive housing market in California. Despite the fact that many people left the city of San Francisco during the Communist China virus (COVID-19) pandemic, its median home price reached $1.2 million in the first quarter of 2021, a 21.8 percent increase over the same period last year.
Median home prices are taken from all transactions across the metropolitan area; in some areas, home prices may have risen by much more than these percentages, while in others, home prices have risen by modest amounts.
In the Southern California region, the Anaheim-Santa Ana-Irvine metro area in Orange County is the third most expensive housing market in California, with the median home price reaching $1 million in the first quarter, up 14.3 percent from a year ago. This also reflects the trend of many people moving from higher density areas to lower density areas during the pandemic. Home prices in the metro area surpassed those in downtown Honolulu (median home price of $940,000 in the most recent quarter, with home transactions up 19.2 percent from a year ago).
The San Diego-Carlsbad metro area is the fifth most expensive housing market in the country. The median price of homes traded there in the first quarter was $763,500, up 14 percent from a year ago.
The Los Angeles-Glendale-Long Beach metro area is the 7th most expensive housing market in the country, with the median home price rising 15.1 percent year-over-year in the first quarter. However, the metro area is the only one of the nation’s 10 largest metro areas that still maintains the trend of previous years’ home price changes, where winter home prices are lower than summer prices.
The Riverside-San Bernardino-Ontario region of the Inland Empire metro area also saw home prices rise sharply during the outbreak, with the median transaction price reaching $475,000 in the first quarter, up 20.9 percent from a year ago.
Other more expensive metro areas in California include the Sacramento metro area, which ranks 23rd in the nation, and Fresno, which ranks 46th in the nation. In the past 12 months, home prices in both metro areas have increased by 18.5 percent.
The future of home prices will depend on supply and demand.
On the demand side, the big unknown is whether the recent surge in home prices in low-density areas is a temporary shift in demand triggered by the epidemic and low mortgage rates, or a permanent shift brought on by working from home and getting tired of the metro area’s nightlife, concerts and sporting events.
On the supply side, whether the difficulties of building new homes (such as longer permitting times and expensive land costs) will ease will determine how much new housing people can buy. As these market forces become clear, housing prices will reflect people’s needs and affordability.