According to a recent report by the California Association of Realtors, home prices in California are at the highest levels they’ve been in more than three decades.
The report highlighted that during the month of May, the median selling price on single family residences was at an average of $417,350 – a sharp increase of more than 33 percent from this same time a year ago (2012). It marks the most significant increase in home value in California since 1980, and the 15th time prices have increased since records were first kept by CAR in the 80s.
The report emphasized that certain areas in California demonstrated “extremely low housing inventory,” which in turn led to an increase in prices as supply and demand fluctuated to meet buyers’ and sellers’ needs. Meanwhile, in San Francisco, similar gains were also realized. The median price of single family homes increased by a healthy 28 percent from the same time last year, with the average home worth about $947,260—which broke the record set in 2007.
“The Bay area, in particular, has been experiencing strong price appreciation, thanks to the region’s robust economic growth, extremely low housing inventory and an increasing demand from international buyers,” Don Faught, president of the California Association of Realtors, explained in a statement.
Overall, total home sales were down by about 3 percent from last year, according to the report, selling at an annualized rate of 431,370 homes.
This drastic increase in homeownership is being attributed to home buyers putting more substantial down payments into their housing purchases while seeking more reliable and sustainable bank loan instruments to fund their acquisitions.
This, combined with the slowly recovering economy, and the nationwide bolster of home prices, are keys to the future of economic growth, as the U.S. struggles to regain traction since the 2006 Great Recession that was mostly fueled by the toxic mortgage meltdown.
“We have a continued, gradual recovery,” said Brian Jones in, a U.S. economist for Societe Generale in New York, in a recent interview with Bloomberg. “The data is solid.”
The same Bloomberg report from late May also stated that consumer confidence was at its highest level since the 2006 recession. In May, consumer confidence peaked at the highest threshold it’s seen in more than six years as the Conference Board’s sentiment index surpassed 76.2, defeating all previous speculation.
Similarly, homes increased in value across the board in the United States in early 2013, gaining 10.6 percent in value, on average, defeating previous estimates of 10.2 percent.
If these healthy economic, real estate and consumer confidence patterns continue, it’s telling of the full recovery that the U.S. market has been eagerly anticipating since the Great Recession.