House prices were up significantly in all California metropolitan areas throughout the past year.
The nearby San Francisco, Oakland, and Hayward metropolitan area is the country’s second most expensive housing market. Its median sale price reached $1.2 million per home during the first quarter of 2021, up 21.8 percent from the year-ago period, despite many people leaving the city of San Francisco during the pandemic.
The median sale price is taken from all the transactions across an entire metropolitan area; it’s likely home prices are up much more than these percentages in some local areas and not so much in other local areas.
In the Anaheim, Santa Ana, and Irvine region of Orange County, home prices reached a median transaction value of $1 million during the first quarter, up 14.3 percent from the year-ago period. This reflects the national trend of many people moving from high-density areas during the pandemic to lower-density areas.
The Anaheim, Santa Ana, and Irvine region is the third most expensive metropolitan area in the U.S., beating Urban Honolulu, where the housing market had a median transaction price of $940,000 per home during the most recent quarter. Transaction values in Honolulu are up 19.2 percent from the year-ago period.
The San Diego and Carlsbad region is the fifth most expensive housing market in the nation. Home prices there reached a median transaction value of $763,500 during the first quarter, up 14 percent from the year-ago period.
The seventh most expensive market—the Los Angeles, Glendale, and Long Beach metropolitan area—saw home prices rise 15.1 percent year-over-year. However, the region was the country’s only top-10 market location where prices this year followed the traditional pattern of being lower in the winter months than in the summer months.
The Inland Empire metro area of Riverside, San Bernardino, and Ontario also saw a large increase in home values as people moved from high-density areas to lower-density areas during the pandemic. The median transaction level reached $475,000 during the first quarter, up 20.9 percent from the year-ago period. The Inland Empire was the 20th most expensive housing market in the U.S. during the quarter.
Rounding out the rest of California, the metropolitan area around Sacramento was the 23rd most expensive housing market; Fresno was the 46th most expensive housing market in the nation. Housing prices went up 18.5 percent in both Sacramento and Fresno over the 12-month period.
Housing prices going forward will be a function of supply and demand.
On the demand side, the big unknown is whether the recent large price increases in the lower-density areas represent a temporary shift in demand caused by the pandemic and made possible by multi-generational low-interest rates, or whether they represent a more permanent shift made possible by working from home and less interest in urban entertainments such as concerts, nightlife, and sporting events.
On the supply side, whether difficulties in constructing new homes such as long permitting times and expensive land costs will be alleviated will dictate how much new housing will be available for people to purchase. As these market forces take place, home prices will reflect where people want and can afford to live.
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