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CA Home Prices Near $1 Million Average. What do Central Valley Homes Cost?
gvw_edward_smith
By Edward Smith
Published 4 weeks ago on
May 23, 2024

California median home prices have reached record highs, surpassing $900,000, but the Fresno market median is less than half of that. (GV Wire Composite/Paul Marshall)

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Even in the face of high interest rates, buyers are still going after homes and statewide prices have reached record numbers.

In April, the state median home price passed $900,000 for the first time, growing 5.8% from the previous month and 11.4% from the year before, according to the California Association of Realtors.

In the Central Valley, prices are rising more reasonably and the speed at which homes sell is picking up steam. Fresno Association of Realtors president-elect Carmen Jimenez Phillips, a Realtor with Century 21 Jordan Link, said the numbers show the market coming into balance, especially from the highly competitive market of the early 2020s.

“I think that it’s a healthy market,” Jimenez Phillips said. “I know it seems like it’s not because we don’t have a large pool of inventory, but I think that I’d rather see this than a market where buyers have to come in with extra money and not really taking care of their needs as far as covering their inspections and appraisals that we have seen in the past.”

(California Association of Realtors)

Buyers Have Money, Making Reasonable Offers: Jimenez Phillips

As home markets enter their busy season, prices have begun to rise. In Fresno County, 2.2% growth, both month-over-month and year-over-year, falls below the 3.1% monthly growth and 6.6% yearly growth in the Central Valley as a whole.

Statewide, prices climbed 5.8% from March and 11.4% from April 2023.

The region’s chronically low inventory has created competition among buyers, Jimenez Phillips said.

Mid-range homes, those around $400,000 are garnering between two and three offers. Those priced at $350,000 and below are getting between three and five, at least, Jimenez Phillips said. Oddly enough, Fresno’s higher-end homes are getting even more interest.

What’s encouraging to her is the offers buyers are coming up with, she said. One young professional couple made an offer on their first home with enough funds over the necessary amount to reduce the principal.

“Right now, we’re dealing with buyers coming in with reasonable loans, as far as them bringing in their own funds, and that means that it’s going to be a stable market,” Jimenez Phillips said.

‘It’s the Fear of Interest Rates’ not ‘the Actual Interest Rates’: Scordino

Interest rates more than double what they were three years ago have kept a large number of homeowners where they are, for fear of losing out on the rates at which they bought.

This has impacted inventory, Jimenez Phillips said. But as mortgage rates hover at about  7%, buyers and sellers are becoming accustomed to those numbers.

The equity built up in homes has helped those upgrading make up for the higher rates.

Residential Broker Don Scordino with Realty Concepts said he believes the market is reaching normalcy and buyers have come to accept interest rates.

“It’s the fear of interest rates rather than the actual interest rates,” Scordino said. “When they do the math and work out what their payments are going to be, they may find out that it’s a good thing to go ahead and buy.”

(California Association of Realtors)

Expensive Home Sales Drive the Statewide Market

Statewide, analysts saw a big divide between the state’s pricier homes and entry-level homes.

Sales velocity for million-dollar homes in April grew 39.8% from last year while the number of sales for homes less than $500,000 dropped 8%. Those million-dollar home sales made up more than a third of all sales in April, the largest share for that segment in at least the last five years, according to the California Association of Realtors.

That trend is not lost on Fresno.

The $900,000 to $1.9 million segment has become pretty competitive with a “healthy number of buyers,” Jimenez Phillips said.

Scordino said the separation between entry-level homes and luxury homes is a symptom of fear in the market.

Those buying million-dollar homes have typically done so before and they’re not surprised by swings in the market, Scordino said. Those buying entry-level homes may be persuaded more by negative reports.

“Most of the million-dollar-plus buyers have bought real estate before and have gone through ups and downs in value, but they realize, ‘I still have my home,’ and eventually they come out ahead,” Scordino said. “So I believe there’s less fear to those that have owned a home before than those that are just getting into the home-buying business now.”

Missing that first-time home buyer segment could spell trouble down the road, Scordino said. It’s those home buyers that buy up the homes when the next people are ready to upgrade. Then those homeowners buy the next tier and so on.

“The first-time homebuyer market usually drives the market upward,” Scordino said. “So as people enter the market, the seller of that home now has to go buy another one.”

Central Coast Interest

The Central Coast, especially Santa Cruz, experienced remarkable levels of growth, both in price and number of sales.

The number of sales in the region grew 26.7% from April 2023. Prices jumped 13.4% from March.

The number of sales in Santa Cruz grew 37.5% from the previous month and 63.5% from the April 2023.

Looking at price, Santa Barbara grew 37.9% from March and 29.6% from April 2023.

Average price for a home in Santa Barbara went for $1.4 million. The median Santa Cruz home sold for $1.42 million.

Scordino said lack of inventory is driving those prices higher.

If interest outlooks bear true, it won’t be until late this year or early next year that the Federal Reserve will drop bank-lending rates, causing mortgage rates to follow — usually.

But rates will not likely change much, Scordino expects.

“I think we’re in a period of time that’s about as normal as we’ve seen in 20, 30 years,” Scordino said. “Homebuying demand is driven by the desire to have a home, and that American dream has always been there. So I think that we’re in as close to a normal market now as we’ve been in many years.”

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Edward Smith,
Multimedia Journalist
Edward Smith began reporting for GV Wire in May 2023. His reporting career began at Fresno City College, graduating with an associate degree in journalism. After leaving school he spent the next six years with The Business Journal, doing research for the publication as well as covering the restaurant industry. Soon after, he took on real estate and agriculture beats, winning multiple awards at the local, state and national level. You can contact Edward at 559-440-8372 or at Edward.Smith@gvwire.com.

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