California house prices can fall soon, says real estate CEO

The California Housing Market is turning on a main signal that can lead to a slowdown in home prices or even drop prices in some markets.

The supply of houses listed for sale in California is increasing, increasing 44% in February compared to a year action, according to data from Realtor.com® Economic Research Team. National growth was only 28%.

Surge California is the fourth largest annual growth in the active lists between states, after only Nevada, Hawaii and Colorado. In some cities in California, the effect is even more pronounced.

Nick Gerli, the founder and CEO of the Revoice real estate start -up application, noted in a last X post than 5 of the top 11 US cities for the annual inventory growth are in California, including San Diego, where active lists have increased 61% by a year’s action.

Inventory growth is usually an early warning sign of poorer price growth, as the supply begins to exceed demand, leaves buyers with more options and forcing some retailers to make concessions.

“Already very realistic to expect that, based on growing more than 50% of the year -round inventory in some of these California markets, we will see a huge slowdown in rising home prices over the next 12 months,” Gerli Realtor.com tells.

“I will not be surprised if prices tend to the whole state or even a little negatively by the end of the year, and especially in certain markets,” he adds.

Some markets in California may also have hit a “affordable wall” at house prices, Gerli notes. In San Diego, for example, the average price of the February list of more than $ 948,000 is far from a family that makes the average family income of about $ 104,000.

However, Gerli says the increasing inventory warning comes with an important warning, which is that the supply of housing in California is expanding from a state of serious shortage, and today only 0.6% of state houses are on the market.

Across the country, the housing inventory remains much below the pre-landmark level. Gerli does not foresee a dramatic correction of prices in California, but rather a more gradual market reinstatement, supported by low unemployment tariffs and predetermined mortgages in the state.

“We are still nowhere near what we have seen in Florida in terms of supply,” he says. “I almost see what we’re seeing in California today as perhaps what we started to see in Florida a year of action.”

Hannah Jones, a senior economic research analyst with realtor.com, say that although many California meters have seen climbing in active lists each year, inventory levels remain below pre-paraaganda level in most of them.

“These markets are turning towards balance, which can be seen in slowing down prices and moderation of time in the market,” she says. “Some markets have seen ranking prices fall every year in recent months, but some of the decline are due to a change in the inventory mixture available.”

In other words, a growing part of the smaller houses listed for sale has dragged typical prices down, a trend that has been observed throughout the country.

However, three cities in California saw annual decline in the average square lists prices in February: San Diego, Sacramento and San Francisco.

San Francisco saw the sharpest fall of 7.3%, followed by San Diego falling 2%and sacramento losing 1.3%.

Only time will indicate whether the lower square list prices in those cities will translate into lower sales prices and declining home values.

“As the inventory builds, it is likely that price increases will continue to be facilitated and the time in the market will slow down,” Jones says. “However, California meters tend to be very competitive and unheard of, so it is unlikely that prices will be much more appropriate in the short term.”