The ripple effects that the pandemic left on our economy have the housing market flipped across the country. So it's no surprise that the 2023 housing market in California has, and will continue to experience twists and turns of its own. 

Today we're highlighting the ins and outs of the California housing market for 2023 to keep buyers and sellers in the loop. 

The Current Housing Market in CA

We're just four months into 2023, and the housing market in CA has already taken plenty of turns for buyers and sellers alike. 

We kicked the year off with through-the-roof interest rates that have doubled since leaving 2022 behind. The average mortgage rate was a whopping 6.26% in February 2023, up 3.4% from January 2022. However, despite the costly price of borrowing for a home purchase, sales are still up month to month. 

So far this year, California's average statewide median home price has declined by $16,000. The median selling price dropped 18.3% from the May 2022 peak of $900,170 to $735,480 in February 2023. 

The span of time homes are sitting on the market has nearly tripled since February 2022, and they are now available for at least 28 days before a sold sign is placed on the lawn. 

What Can We Expect for the Remainder of 2023? 

While the fear of a housing crash has been buzzing through the state, economists aren't predicting a real housing crisis in the near future. According to Houzeo, the strict lending standards required to purchase a home and the significant decrease in foreclosures we've been experiencing will help keep the market afloat. 

However, there is still the potential for the housing market to slow down, and here's why. 
Many current homeowners are choosing to remain in their current homes to preserve their pre-existing low interest rates, leading to competition and increased bids amongst buyers due to limited new listings. Overall, the number of homes sold is expected to decrease because of the limited inventory available on the market. 

On top of that, home prices are expected to continue to drop, which will help maintain (or at least level out) affordability for buyers who will be hit with those higher interest rates. 

Based on Fannie Mae's National Housing Survey, 40% of consumers believe it's a bad time to sell their home, while 79% believe the current market is a bad time to buy. These statistics have proven accurate because the number of mortgage applications has hit a 28-year low.

Parts of California Are Heating Up 

While housing prices are expected to drop overall, a few areas across the Golden State are still predicted to experience growth. For example, a report from Redfin suggests that West Hollywood, CA is the top metro in California right now, with the fastest-growing sales price at a rate of 22%. 

Other cities following this same upward trend include: 

• Santa Monica
• Hanford
• Santa Ana
• Santa Barbara
• Glendale
• San Juan Capistrano
• Santa Maria
• Walnut Creek
• San Clemente

And Some Are Cooling Down

C.A.R. has reported that the sales of homes in 42 of the 58 California counties have dropped more than 30%, while 8 of those counties have experienced more than 50% drops. 

Some of the areas that have already taken the biggest hit for 2023 are: 

• Lassen County
• Calaveras County
• Mariposa County
• Yuba County

Buyers Are Looking Elsewhere

Many buyers are looking outside their immediate region to continue or improve their lifestyle based on affordability. Despite reduced housing prices in the Bay Area, buyers are fleeing for single-family homes and affordable opportunities that regions such as Sacramento County have to offer. With the addition of community-focused districts such as the Railyards infill project, relocating to Sacramento has many benefits. 

However, the rate of inflation, increase in mortgage rates, and the decline in home value are sending some California residents packing for other states, with the top 5 being Florida, Texas, Arizona, Tennessee, and South Carolina. 

Overall, the housing market in CA for 2023 is predicted to continue the trend of high interest rates, decreased sales prices, and limited inventory, making for a competitive sellers' market.