Our crystal ball helps decipher numerous forecasts that ponder the future ups and downs of the economy.
Buzz: California’s metro areas will dominate the nation’s top-performing housing markets in 2021.
Source: Realtor.com
The Trend
Realtor.com ranked 100 large metropolitan areas based on forecasts for next year’s home sales and price growth and compiled the predictions into an overall score. By this math, California is forecast to have six of the nation’s 20 best-performing markets in 2021.
Sacramento was ranked No. 1, projected to rise 24.6% from a combined 17.2% rise in sales and 7.4% price growth. No. 2 was the San Jose metro with 21.6% growth combined from 10.8% sales growth and 10.8% price growth.
The 100-market median was forecast at 11.1% growth combined from 6.6% sales increases and 4.5% pricier housing.
The dissection
The report noted that “a common driver of this year’s top markets is the prevalence of high-paying tech jobs. Tech salaries in Sacramento, San Jose, Boise, Denver and Seattle have driven home prices through the roof over the last several years, and this trend is expected to continue in 2021.”
The rest of California in Realtor.com’s study:
No. 8 Ventura County: 18.0% — sales up 12.5% and 5.5% higher prices.
No. 10 Riverside-San Bernardino counties: 17.9% — sales up 12.4% and 5.5% higher prices.
No. 14 Los Angeles-Orange counties: 17.3% — sales up 10.0% and 7.3% higher prices.
No. 18 San Diego: 16.8% — sales up 11.3% and 5.5% higher prices.
No. 26 Stockton: 14.3% — sales up 8.2% and 6.1% higher prices.
No. 28 Bakersfield: 14.2% — sales up 10.5% and 3.7% higher prices.
No. 64 San Francisco metro: 9.7% — sales up 1.3% and 8.4% higher prices.
By the way, the worst projected place for housing in 2021? New York with a -3.3% combined score — sales down 3.8% and only 0.5%higher prices.
Quote
“This past year, we’ve all become more reliant on technology to work, learn and maintain personal connections. The technology hubs that make this possible are thriving, as are their housing markets,” said Danielle Hale, Realtor.com’s chief economist. “Homebuyers, particularly younger first-time buyers, looking in one of these markets should expect rising prices and heavy competition. Meanwhile, sellers will remain in a position of power but will find themselves on the other side of the bargaining table when buying their next home.”
Caveat
“Home prices in eight of the top 10 markets are more expensive than the average of the Top 100 markets,” Realtor.com said. “But many are relatively affordable when compared to their nearby counterparts or offer significantly more square footage for a similar price.”
Examples include Sacramento, where prices run $284 per square foot, vs. San Francisco ($679) and Ventura County ($413) and Riverside-San Bernardino ($247) vs. L.A.-O.C. ($556).
How believable?
On a scale of zero (no way) to 10 (guaranteed) … SEVEN!
Historically low mortgage rates will likely drive homebuying and appreciation as the economy heals from its pandemic-induced recession. However, at some point, the number of folks who can afford to buy at ever-inflated prices will become limited.
