Each year, real estate franchise Coldwell Banker publishes a “Home Listing Report” with housing market data for nearly 2,000 cities and metro areas nationwide. It is based on analysis of more than 51,000 comparable homes (four bedroom, two bath) from housing markets in all 50 states.
Among other things, the report lists the most expensive real estate markets in the U.S. As it turns out, the top-ten list is dominated by California housing markets. Of course, if you live in the Golden State, this probably comes as no surprise. But still…
Most of the Most Expensive Real Estate Markets Are in California
Going into 2015, nine of the ten most expensive real estate markets are located in California. This is according to the annual report compiled by Coldwell Banker. Here is their top-ten list of the priciest cities in which to buy a home…
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(Editor’s Note: This particular report looks at single-family homes with four bedrooms and two bathrooms. As a result, some of the most expensive real estate markets in the U.S., such as New York City — and Manhattan in particular — are not included in the rankings. There aren’t many properties that meet those parameters in the Big Apple.)
Priciest Housing Markets in 2015, Despite Boom and Bust
California has been home to the nation’s most expensive real estate markets for many years. It was also the scene of the biggest real estate bubble in the early 2000s, followed by the some of worst housing market crashes at the city and metro level. In some parts of the state, entire neighborhoods were vacated by foreclosure and bank repossession.
Always one for extremes, California real estate markets also led the national housing recovery. In 2013, for example, many cities in the Golden State experienced year-over-year home price gains will into the double digits. But prices are now cooling considerably. Inventory is the reason for this.
In the immediate wake of the housing collapse, nobody wanted to buy a home in California — not even investors. But following the recession, when the U.S. economy began showing signs of life again, investors began buying properties in large numbers. Housing inventories subsequently plummeted in most California real estate markets.
At the same time, the job market was rebounding and putting more people in a position to buy a home. But there were very few homes to go around. High demand, low inventory. This accounted for the tremendous price growth in California’s major real estate markets, particularly in 2012 and 2013.
Inventory ‘Normalization’ Cooling Home Prices
Today, the inventory crunch is over in most parts of the state — with the notable exception of San Francisco, where housing demand still outweighs supply by a good way. In San Francisco, the total number of homes listed for sale declined by 10% over the last year, according to Realtor.com.
In most of the state, however, we are seeing a return to normalcy where housing inventory is concerned. There are enough houses available to satisfy the current level of demand. So home prices across the state will likely rise at more modest levels in 2015, compared to the previous two or three years.
But California homeowners shouldn’t be too worried about price stagnation. The state is expected to outpace much of the nation in 2015, where house values are concerned.
Despite all of these ups and downs, California is still home to some of the most expensive real estate markets in the U.S. And it probably always will be.