Like the rest of the Golden State, western Nevada County saw more homes sell in 2021 over the prior year despite a dearth of inventory pushing prices to record levels.
State home sales for the entire year recorded the strongest pace since 2009, exceeding 2020’s level by 7.9%, the California Association of Realtors reported in a news release.
“Despite signs of moderating in the second half of the year, California’s housing market continued to outperform last year’s level and remained competitive even as home prices rose at a double-digit pace — a testament to the imbalance of high demand and not enough homes on the market for sale,” said association President Otto Catrina. “For the year as a whole, the market turned in its best performance in more than a decade, as buyers took advantage of historically low-interest rates and continued to value the benefits of homeownership amid another year of the pandemic.”
For the year as a whole, the association reported, annual home sales rose to a preliminary 444,520 closed escrow sales in California, up 7.9% from 2020’s pace of 411,870.
Western Nevada County saw a 3.4% year-over-year increase in homes sold, from 1,744 in 2020 to 1,804 in 2021, according to Multiple Listing Service statistics.
LOW INVENTORY NOT SLOWING SALES
The growth in sales came in a market experts say is operating with the lowest inventory on record across the state, with 1.2 months of supply in December. Western Nevada County’s 158 homes on the market in December totals about one month’s supply at 2021’s sales pace.
The pressure of that lagging low inventory, which featured fewer than 300 homes on the market each month of 2021, has pushed prices to record levels.
And as California struggles to add new construction to the market, despite new homes comprising a record one-third of homes sold nationally, sellers of existing homes are enjoying record prices for their property.
Statewide median price rose to $796,570 in December, the association reported, up 1.8% from November’s $782,480 and up 11% from the $717,930 recorded in December 2020. The double-digit annual price gain was the 17th consecutive month with more than a 10% increase since the summer of 2020.
Locally, the median price of a home sold in January was $540,000, 32% lower than the state median in December and 4.4% off the western Nevada County record $565,000 median recorded in July and August.
January’s 106 homes sold was down 19.1% from December sales, but still higher than the 102 homes sold in January 2021 and reflected a 43% increase over January 2020, when 74 homes sold locally.
For a pre-pandemic perspective, a total of 90 western Nevada County homes were sold in January 2019.
FED: EXPECT MARCH INTEREST RATE INCREASE
Federal Reserve policymakers say they’ll raise interest rates in March, Reuters reported, “but spoke cautiously about what might follow, signaling a desire to keep options open in the face of an uncertain outlook for inflation and a pandemic still ongoing.”
Interest rate hikes not only mean less purchasing power for buyers, as the cost of borrowing increases, but also likely an increase income requirements from lenders to meet the increase in monthly mortgage payments. After enjoying the historically record low interest rates in recent years, buyers are likely to find it more difficult to meet record prices across the Golden State.
“The state’s housing market is expected to perform solidly this year as the economy recovers further and consumers’ desire to buy remains elevated,” said California Association of Realtors Vice President and Chief Economist Jordan Levine. “However, with COVID cases surging and inventory constraints remaining an issue, the housing market will see headwinds of ongoing high inflation, which will put pressure on the Fed to raise rates sooner than previously expected. These factors will increase the cost of borrowing and put more affordability burden on potential homebuyers who want to purchase in 2022.”
Brian Hamilton is a Realtor (Lic.# 02149112) and assistant to the regional manager for the Betsy Hamilton Real Estate Team (Lic.# 01936209) at RE/MAX Gold in Grass Valley. For more information, contact him at Brian(at)BetsyHamilton(dotted)com or visit http://www.BetsyHamilton.com