California Home Prices Reach Record Highs: What Landlords Need to Know
California Home Prices Reach Record Highs: What Landlords Need to Know
The price of a typical home in California has reached a new high, surpassing $900,000. According to the California Association of Realtors, the median price for an existing single-family house was $904,210 in April 2024, marking a significant increase from previous months.
Key Points:
Record Home Prices: The median price for a single-family home in California reached $904,210 in April 2024, setting a new record.
Rising Trends: Home prices increased by 5.8% from the previous month and 11% over the past year.
Historical Context: This marks a steady increase from previous milestones: $800,000 in March 2022, $700,000 in August 2020, and $600,000 in May 2018.
Affordability Gap: The rise in home prices has put homeownership out of reach for many Californians, widening the affordability gap.
Declining Sales: The number of homebuyers in April remained below 300,000 for the 19th consecutive month, with an average of 280,000 sales per month over the last 25 months.
Implications for Landlords and Property Owners:
Rental Market Potential: With fewer people able to afford homes, the demand for rental properties is likely to increase; widening of the affordability gap.
Investment Opportunities: High home prices may present opportunities for investors to convert single-family homes into rental properties via ADU, potentially increasing rental income.
Market Adaptation: Landlords should consider the impact of high mortgage rates, which have risen to 7% , leading to higher monthly payments. + increased insurance costs, turnover costs, & utility costs. This will impact cash flow and the overall investment picture for the asset.
Graph Credit * C.A.R.
