A report by the Santa Barbara Independent says that California’s housing market has turned into a “major crisis that may soon turn into a statewide economic downturn,” and few industries are safe from the state’s real estate market.
The report states that the market is hampered by a lack of supply and rising costs. The Legislative Analyst’s Office (LAO) estimated the shortage is between 3.5 million to 4 million housing units.
“The lack of housing has not only driven up prices by 24.9% (for two-bedroom homes) since 2010, but it has also had a noticeable effect on migration. In another report, the LAO found that between 2007 and 2016, net migration in California was negative one-million individuals,” the report states.
The Santa Barbara Independent also states that the housing market will not only impact low-impact earners, but high-income earners as and tech firms and financial service businesses of Silicon Valley and San Francisco will “be the first to feel the effects.”
A report by CoreLogic, however, showed the California housing market showed signs of recovery in May.
The report states that existing homes sales increased by 10.6% month-over-month in Los Angeles, Riverside, San Diego, Ventura, San Bernadino, and Orange Counties.
While this is an increase from April, home sales are down 2.7% from 2018, and the 22,300 homes sold for the month was the lowest for that month since 21,754 were sold in May 2015.
Home sold in the San Francisco Bay Area saw an increase of 18.9% from April 2018, but still down 2.7% year-over-year.
Total home sales in San Francisco in May were the lowest for that month since 8,038 were sold in May 2016. CoreLogic states sales have been declining in the double digits from November 2018 to March 2019, but May’s decline was reported at just 2.7%.
The average price of homes sold in San Francisco in May 2019 was $860,000—a slight increase of 1.2% from April 2019.