US Housing Market Heats Up... California Surpasses $800,000

(Photo by Bloomberg News)

[Asia Economy Reporter Yujin Cho] Bloomberg reported on the 17th (local time) that the COVID-19 pandemic has triggered a boom in the US housing market, causing California home prices to soar to record highs.

According to the report, the median home price in California surpassed $800,000 for the first time last month. This represents an increase of about 7.2% compared to the previous month and a sharp rise of approximately 34% compared to the same month last year, when the COVID-19 outbreak first began.

The pandemic is fueling the California housing market, which is known for its luxury homes, the report said.

The strong rise in home prices is a phenomenon occurring nationwide, including California. Supply shortages and historically low interest rates are cited as the causes driving up housing prices.

Moving demand due to the COVID-19 situation and the rise of young people in their 30s are also analyzed as other causes. The spread of remote work and online classes during the pandemic has led to a surge in homeownership demand among young people, which has become the driving force behind the housing market boom.

The WSJ reported that even after last year, which saw the most active home sales in 14 years, the heat in the US real estate market has not cooled down, and home prices are expected to rise more sharply than during the 2006 boom.

According to the National Association of Realtors, the median price of existing homes sold nationwide last week was $319,200, continuing the monthly upward trend since the beginning of this year.

Mark Vitner, senior economist at Wells Fargo, said, "Real estate price increases are appearing almost everywhere," adding, "It is surprising to see home prices rebound so quickly and sharply in the early stages of economic recovery."

Experts predict that this housing cycle will continue its expansion phase. Jordan Levine, chief economist at the California Association of Realtors, said, "As home prices continue to surge, it will become increasingly difficult for the homeless to purchase homes in the future."

According to the National Association of Home Builders (NAHB), the US Housing Market Index for May was 83, maintaining the same level as the previous month. This also met market expectations (83).

The Housing Market Index rebounded from the worst plunge in history during April last year, when COVID-19 was at its peak, and set record highs for three consecutive months from September to November last year, the highest in the 35-year history of the index.

This content was produced with the assistance of AI translation services.