Top cities in California are seeing home values grow as competition for properties continues to ramp up, pushing up prices and making buying a house in the state one of the most expensive propositions in the country, according to real estate platform Zillow.
High prices along with elevated mortgage rates is making homeownership a tough choice for most Americans. At the national level, a home is worth nearly $356,000, a more than 42 percent jump from before COVID.
That has made buying a home at that potential price at current mortgage rates at or near 7 percent, with a 20 percent down payment, would mean about $1,850 monthly outlays.
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This is more than a 100% from before the pandemic, Zillow points out. In California, meanwhile, the value of a home is about $784,000, according, illustrating how expensive the market is in the state.
San Jose saw monthly home values rise more than 3 percent in March. Other cities that saw some of the highest value gains include San Francisco, with a near 3 percent increase, followed by San Diego and Los Angeles with about a 2 percent jump.
Seattle was the other city that saw a high appreciation of value. These areas make up five of the most expensive cities for the largest 50 housing markets in the country.
"Shoppers in these tech-heavy markets are still experiencing bidding wars as commonplace—they all ranked among the 10 major markets with the highest share of homes sold over asking price in February," Skylar Olsen, Zillow's chief economist, said in a note published on the platform's website.
Those looking to buy in these areas are battling over little available inventory, escalating what sellers can charge on a home.
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"All of these metros have seen below-average recovery in inventory compared to pre-pandemic. Remember they were all fairly hot coming into the pandemic, so inventory was starting from a lower baseline," Olsen said.
In the South, however, increased building of homes is helping to relieve price pressures, according to Zillow. The metro areas of New Orleans, San Antonio, and Tampa, Orlando, and Jacksonville in Florida, saw just 0.5 percent value gains from February to March.
"New construction is providing a pressure-relief valve in these metros, giving move-up buyers a place to go," Olsen said. "Recovering inventory in these areas has helped ease competition and bring price appreciation under control."
The markets in New Orleans and San Antonio are seeing buyers being offered more inventory choices compared to a period before COVID.
Nationally, more homes are being sold over their listing price, as of February, compared to the same time last year—approximately 27 percent compared to around 24 percent in 2023.
Three of the five cities where homes were being sold above price the most were all in California. San Jose saw more than 69 percent of properties purchased at above sticker value with San Francisco at nearly 63 percent over the initial announced price and Los Angeles at 49 percent.
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