By Mark Schniepp and Ben Wright
Dec. 17, 2020
Just as we enter the typical winter lull, demand for housing actually appears to be rising. Nationwide, it’s approaching the highs of the housing bubble era, with mortgage applications surging in November and December.
In California, the number of house hunters has been climbing for several weeks and is rising faster than similar data nationwide.
It appears that home prices are falling into a more affordable range. The median selling price has depreciated meaningfully since August and September, and listing prices have fallen even faster.
Mortgage rates keep setting lower new records each week, and even though prices are still 15 percent higher than they were at the beginning of 2020, the typical mortgage payment on the median priced home is only up by 1 percent.
Bargain hunters have emerged from hiding, pushing up demand. At a time when inventory is declining, we wouldn’t be surprised if another increase in selling prices follows.
What the last few months has shown is that home buyers have become more sensitive to price, largely because of how prices have behaved this year, rising much more sharply than in the previous two years.
Re-posted Dec. 18, 2020, by permission from Mark Schniepp, head of the Goleta-based California Economic Forecast, an economic consulting firm that produces commentary and analysis on the U.S. and California economies. The firm specializes in economic forecasts and economic impact studies, and is available to make timely, compelling, informative and entertaining economic presentations to large or small groups.