California City Breaks Housing Market Record

Home prices in San Jose, California, have soared to record levels in the second quarter of 2024, according to the National Association of Realtors, part of a trend that saw most metro areas of the U.S. record gains even as a rise in mortgage rates have made home loans more expensive.

The median price for a previously-owned single-family home in San Jose rose to a little more than $2 million, NAR revealed in a report published Tuesday.

“It’s the first time since NAR began tracking metro area single-family home prices in 1979 that a metro area’s median price exceeded $2 million,” the organization said in a statement.

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NAR pointed out in the report that about 90 percent of metro areas in the U.S. have seen prices go up as mortgage rates have ticked up to above 7 percent. Housing market experts have suggested that the rising rates have caused homeowners to lock in to their current lower rate mortgages, stifling the supply of homes for sale and, in turn, escalating competition for properties. This has played a role in rising home prices.

“The record-high home prices in most metro markets bring good and bad news,” NAR chief economist Lawrence Yun said in a statement. “It’s terrific news for homeowners who are moving ahead in wealth gains. However, it’s difficult for those wanting to buy a home as the required income to qualify has roughly doubled from just a few years ago.”

NAR pointed out that median prices for existing single-family properties nationwide shot up nearly 5 percent to a little more than $422,000.

Regionally, NAR reported that the South had the largest share of single-family existing-home sales in the second quarter at 45.5 percent with a price appreciation of 2.3 percent. The northeast reported a price jump of nearly 10 percent in home prices, the midwest jumped 5.5 percent and the west increased 5.4 percent.

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California led the country in the number of expensive housing markets, NAR suggested.

The San Jose-Sunnyvale-Santa Clara area registered an 11.6 percent rise in prices to $2 million. Meanwhile, San Francisco-Oakland-Hayward parts of the state had an 8.5 percent price increase in the second quarter of 2024 compared to the same time a year ago to $1.45 million. Anaheim-Santa Ana-Irvine also in California rounded out the top three expensive housing markets with a 15 percent jump from last year to about $1.44 million.

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“Seven of the top 10 most expensive markets in the U.S. were in California,” NAR pointed out.

Elevated mortgage rates have made it tough for prospective homeowners, NAR suggested, but with recent trends suggesting rates could be declining, things could change for buyers.

“Housing affordability will improve in upcoming months,” Yun said in the statement. “Mortgage rates have fallen measurably, and more supply is reaching the market. Therefore, the income required to buy a home will decrease.”