The latest data from real estate company Coldwell Banker suggests that things have not changed too much – California is one of the most expensive states, if not the absolute most expensive state for consumers looking to buy a new home.
Coldwell Banker’s Home Listing Report is a study published annually, covering close to 2,000 American cities and metropolitan markets. Over 51,000 homes with four bedrooms and two bathrooms are analyzed, covering all 50 states. In this annual report, Coldwell Banker also enumerates the ten most expensive markets in all of America, and for the 2014 report, it looks like California has taken up all but one spot on the list.
This is not surprising considering the so-called Golden State’s reputation as a premium place to live, but for the sake of discussion, we shall look at the entire top ten list and see which markets, including all nine California cities/metros, are among the most expensive.
In fact, California takes up the entire top nine, with Wellesley, Mass. being the only non-Californian city/metro at tenth place and its average home value at $1,090,088. That is still close to one-half of the top city’s average value – Los Altos was first place on Coldwell Banker’s list with an average value of $1,963,099. Newport Beach came in second with a home value averaging $1,904,083. These two cities were followed in the top five by Saratoga (3rd, $1,867,979), Redwood City/Woodside (4th, $1,430,329), and Los Gatos (5th, $1,307,408).
For the rest of the top ten, San Francisco was sixth place, coming in with an average home value of $1,294,250. Seventh place belonged to Sunnyvale ($1,267,184), eighth to Moraga ($1,129,300), and ninth to San Mateo ($1,093,346). As mentioned above, Wellesley was at tenth place, the lone exception in a top ten list dominated by areas in California. Then again, some have pointed out that the list may indeed be skewed toward California by design – it only covers four-bedroom, two-bath houses, which effectively excludes traditionally premium markets such as New York City and Manhattan from the top ten, as there are not enough such properties in those particular cities.
For the past several years, California has been notorious for exorbitant home prices, and it was not surprising when the Golden State was right where the housing bubble of the 2000s had focused on. When the real estate market crashed with the U.S. economy and most other worldwide economies, California became a hotbed for foreclosures, short sales, and repossessions.
Then again, California was also where the eventual housing recovery was most felt; in 2013, many California cities experienced significant price gains on a year-over-year basis. And with inventory now normalizing in the state, that has resulted in price gains settling down substantially from their rally of 2013.
Currently, inventory in most parts of California (emphasis on “most”) has returned to normal levels, with a fair equilibrium between supply and demand. And since rapid home price increases helped shut a lot of consumers out of the market, it looks like price increases will continue to cool in 2015, but still have California trumping most of the United States in terms of home values.