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2022: What to Expect in Northern California Real Estate
December 8, 2021

2022: What to Expect in Northern California Real Estate

by The CE Shop Team

Here’s the Forecast for Northern California’s 2022 Real Estate Market

After a turbulent year for the Northern California real estate market, it appears that the housing market is beginning to cool down. The forecast for California’s housing market in 2022 remains optimistic despite declining home sales and population growth due to the demand for homes in the state. 

2022 Northern California Real Estate Outlook: Mild

In October 2021, the average home in California was priced at $722,406, a 21.0% increase year-over-year (YoY). There’s little sign of prices stalling, though, as Norada Real Estate Investments predicts this figure will rise by another 5.2% within the next year. Rising prices echo the gradual healing of the economy statewide, signaling that this year could be profitable for agents and sellers alike, while low-interest rates maintain some degree of affordability for buyers.

Along with rising home prices, home sales statewide decreased 5.9% year-over-year as of October 2021. Inventory also fell a significant 18.5% over the course of the year. Between lasting low-interest rates bolstering demand and a consistently low supply, Northern California is a seller’s market heading into 2022.

After the economic trials and tribulations of 2021, the Golden State’s population has declined for the first time since its founding in 1850. Per coverage from CBS8, “about 6.1 million people left for other states and only 4.9 million arrived from other parts of the country” from 2010 to 2020. However, the population decline hasn’t translated into lower costs for buying or renting property. In fact, rent prices increased by 16.8% statewide. 

Meanwhile, only 0.5% of California homeowners fell delinquent on their mortgage as of March 2021 compared to 0.8% of American homeowners who fell delinquent on their mortgage during that same timeframe. Also, equity slipped into the negative on only 0.8% of homes statewide, making it the lowest rate of homes with negative equity across the United States. So, while the population declines, renters lament, and demand remains steady, California homeowners continue to thrive.

California Home Data
Source: Zillow

2021-2022 Northern California Real Estate Market Data

Zillow Home Value Index

$722,406

Home Value Change YoY

+21.0%

One Year Home Values Forecast

+5.2%

Rent Price Change YoY

+16.8%

The Percentage of Homes With Negative Equity

0.8%

Mortgage Delinquency Rate

0.5%

Available Housing Inventory

45,704

Buyer’s or Seller’s Market

Seller’s

Market Insights for Northern California 

In August 2021, the California Employment Development Department reported that the state’s unemployment rate landed at 7.5% statewide, down from 12.3% last year. While still higher than the national average, California’s improving job market shows promise. As healthy economic activity often correlates with growth in the real estate industry, narrowing unemployment rates are a positive sign for agents in the coming year. 

Beyond the economic opportunity, California has much to be proud of and offer to its residents and visitors alike. Here’s how California shakes out in comparison with the rest of the nation:

2022 Real Estate Market Forecast California

Commercial Real Estate Market Insights

The momentum of 2021’s residential real estate market did not mirror Northern California’s commercial real estate market. Throughout this year, the number of companies that left California continued to grow, citing high tax burdens and high costs of living for employees.

Despite these facts, there is hope on the horizon. According to research from law firm Allen Matkins and the University of California-Los Angeles Anderson management school, just over 50% of developers surveyed reported feeling optimistic about California’s commercial industry in February 2021. 

“It’s not at all clear that the trend that downsizing the space per person will continue outside of the pandemic,” says John Tipton, partner at law firm Allen Matkins. However, some developers are hedging their bets regardless. In Northern California, developers who plan to start new office projects in the coming year dropped to 12%, down from the 40% who started one or more office projects in 2020.

Ultimately, we predict that residential real estate agents will stay busy, though the market may cool over the course of the year as buyers struggle to find affordable housing amidst low inventory. Commercial real estate in Northern California continues to try and regain lost ground after an unpredictable couple of years. Overall, 2022 is still forecasted to be a strong year in terms of real estate, so all Northern California agents will need to be at the top of their game. From buyers battling rising prices to sellers fielding multiple offers, there has never been a better time to serve your fellow Californians

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