Contra Costa County Housing Market Update & Forecast: Summer 2020

The Contra Costa County real estate market has held up exceptionally well in 2020, despite the coronavirus pandemic that has plagued other aspects of the economy.

The same is true for much of California, and the broader national housing market as well. Economic analysts have been surprised by real estate’s ongoing resilience during the public health crisis.

With that introduction out of the way, here’s a look at current trends and forecasts for the Contra Costa housing market through 2020 and into 2021.

Contra Costa Housing Market Outlook

What does the future hold for the Contra Costa County real estate scene? What’s the general outlook and forecast for the rest of this year and into next?

These questions can be difficult to answer in the best of times. When you add economic uncertainty into the mix, the future becomes even murkier and harder to predict.

With that being said, it wouldn’t be surprising to see the Contra Costa real estate market continue marching along through 2020 and into 2021. It has shown remarkable strength up to this point, even several months into a pandemic. That could very well continue in the months ahead.

A recent report from the California Association of Realtors (C.A.R.) showed that the state’s housing market continues to hold up. Though home sales are down year-over-year, they’ve rebounded in recent months. Meanwhile, home prices across California have actually risen over the past 12 months.

According to C.A.R.’s chief economist Leslie Appleton-Young:

“A new record high in the statewide median price suggests that there is stronger housing demand … It also highlights both the affordability and supply issues created by the uneven impact of the coronavirus pandemic as the more affordable segments of the state’s housing market are recovering at a slower pace.”

Rising values are largely the result of tight supply conditions combined with surprisingly steady demand from home buyers. Those conditions will likely remain in place for the foreseeable future, brightening the forecast for home prices.

Like much of the state, the real estate market in Contra Costa County continues to plug along. According to recent data from C.A.R, home prices in Contra Costa County rose by 8.8% from May to June of this year. Year over year, prices in the county are up 7.5% (when measured from June 2019 to June 2020).

This is what real estate analysts and economists mean when they refer to the “surprising strength” and resilience of the U.S. real estate market. Contra Costa County is a good example of this resilience. People continue to buy homes and prices continue to show strength, despite the uncertainty in other areas of the economy.

Tight Inventory Conditions Remain

Home buyers beware: A recent surge in home sales has reduced inventory levels within the local housing market.

Citing C.A.R. data again, the “unsold inventory index” for Contra Costa County dropped from 3.3 in May 2020 to 1.9 in June. In June of last year, that index was sitting at 2.4, and even that was low by historical standards.

The key takeaway here is that there are fewer homes on the market today compared to last year, and for a number of reasons. One reason is that some sellers have pulled their homes off the market, due to the pandemic. Strong demand from buyers, fueled by record-low mortgage rates, has also contributed to the tight inventory conditions.

Low Mortgage Rates Boost Loan Applications

According to multiple sources, purchase loan applications are up all across California. This means that buyers are actively seeking homes and applying for mortgage loans to finance their purchases.

This is partly a testament to the adaptability of the real estate and mortgage industries, which have transitioned to an entirely digital workflow.

Historically low mortgage rates are also playing a role here. Today, home buyers in Contra Costa County and across California are locking in some of the lowest mortgage rates we’ve seen in 50 years of record-keeping.

It bears repeating: 30-year mortgage rates are lower today than they’ve been in decades. In fact, they recently fell below 3% for the first time ever. That’s for a 30-year fixed-rate mortgage. The less popular (but still useful) 15-year mortgage currently has an average rate of around 2.46%.

Given current supply and demand trends in the area, one could actually make a positive forecast for the Contra Costa housing market in 2021. Unemployment remains a challenge in the county, as it does across the country. But the real estate market has shown that it can weather the storm.

Unemployment Remains an Issue

According to the U.S. Bureau Of Labor Statistics, the unemployment rate in Contra Costa County, California was 13.4% in June 2020.

That was down a bit from the peak reached back in April, and is also lower than the statewide average of 15.1%. But obviously, there is still a lot of room for improvement in this area.

If health officials get a better handle on the coronavirus situation down the road, we could see more hiring and a corresponding drop in unemployment. This would benefit the housing market in Contra Costa County as well as the broader economy — not to mention the lives of our residents. So let’s keep our eye on that light at the end of the tunnel.

In light of everything that’s happening right now, it would be hard to issue a precise forecast for the Contra Costa County real estate market in late 2020 or early 2021. But given the strength this market has shown through several months of the pandemic, the future could be brighter than we think.