Walnut Creek Real Estate Market Forecast for 2021

It’s hard to believe that housing analysts are making strong and positive predictions for the Walnut Creek real estate market in 2021. After all, we’re still embroiled in a global pandemic that has shaken other aspects of the U.S. economy.

But there’s no denying the data and reports. The local housing market has shown surprising strength over the past few months, despite the COVID-19 pandemic and resulting economic shakeup. And a recent forecast for the Walnut Creek real estate market into 2021 suggests that home prices will continue to climb due to strong demand.

Home Prices Climbing Steadily in Walnut Creek

Let’s start with where we are right now, before projecting into the future. Here’s a quick roundup of housing-related trends for Walnut Creek and the broader Bay Area, as of October 2020.

Despite a slight dip that occurred in 2019, home prices in Walnut Creek, California have followed a mostly upward trajectory since 2012. You can see this in the chart below, created by the real estate data and listings company Zillow.

The median home value for this housing market rose by around 7% over the past year or so. As of September 2020, the median was around $980,000 and climbing. Additional gains are expected next year.

It’s important to note that home values in Walnut Creek continued rising, month to month, even as the COVID-19 pandemic took root in the U.S. This shows that there is strong demand among home buyers in the area, even at a time when you might expect demand to evaporate.

The broader Contra Costa County real estate market is also thriving right now. As we wrote in a recent blog post, home prices within the county have climbed sharply in recent months due to strong demand and limited inventory.

According to the California Association of Realtors (C.A.R.), the median selling price for existing single-family homes in Contra Costa County rose by a whopping 19% from August 2019 to August 2020.

The bottom line is that the Walnut Creek housing market has withstood everything a pandemic and economic downturn could throw at it. And it shows no signs of weakening now or in the near future. More to follow on that.

A Positive Real Estate Market Forecast for 2021

So that’s where we are right now. Looking forward, the research team at Zillow recently offered a positive forecast for the Walnut Creek real estate market extending into 2021. That’s not surprising, when you look at the current supply-and-demand imbalance in our area.

In October, the company’s housing analysts made the following prediction: “Walnut Creek home values have gone up 6.9% over the past year and Zillow predicts they will rise 8.9% in the next year.”

Real estate market conditions are influenced by many factors, some of which overlap in complex ways. But when you get down to it, there are three primary factors that are driving housing-market trends in Walnut Creek. These factors will likely play a major role in 2021 as well.

1. A low supply of homes within the city and surrounding area
2. Strong demand for housing in the area
3. Record-low mortgage rates motivating buyers

Let’s take a quick look at these three trends, and how they might affect the market in 2021.

1. Low supply within the housing market

According to a recent forecast from the California Association of Realtors, tight supply conditions will affect the local housing market in 2021 — just as they did in 2020.

The C.A.R. forecast issued in October stated: “While the economy is expected to improve and interest rates will stay near historical lows, housing supply constraints will continue to be an issue next year and may put a cap on sales growth in 2021.”

 As of September 2020, the Walnut Creek area had less than a two-month supply of homes for sale. That was well below the national average for that same month, and also below most other similar-sized cities in the U.S. Home buyers entering this real estate market in 2021 should be prepared for stiff competition.

Those same “constraints” will likely put upward pressure on house values throughout 2021, as buyers compete for limited inventory. This factor has certainly influenced the positive real estate market forecasts for Walnut Creek and the broader Bay Area.

2. Strong demand among home buyers

Despite the ongoing COVID-19 situation and higher unemployment, there are still plenty of home buyers eyeing the real estate market in Walnut Creek. The same is true for most parts of the Bay Area, as of fall 2020.

Over the past few months, real estate agents have reported a high level of demand among home buyers in the area. We’ve heard stories of buyers waiving contract contingencies, and other tactics that are often used in a highly competitive markets.

This anecdotal evidence is well supported by data. For instance, from September 2019 to September 2020, single-family existing home sales in Contra Costa County rose by approximately 10%.

3. Record-low mortgage rates in 2020 and (possibly) 2021

On the mortgage rate side of things, there has been nothing but good news for home buyers lately. The average rate for a 30-year fixed home loan dropped to a record low of 2.81% this week. That’s based on the weekly survey conducted by Freddie Mac.

The research team at Freddie Mac recently wrote:

“Low mortgage rates have become a regular occurrence in the current environment. As we hit yet another record low, the tenth record this year, many people are benefitting as refinance activity remains strong.”

Here’s another interested trend of recent months. The popular 30-year fixed mortgage loan is now competing with the 5-year ARM loan, as far as interest rates go. That’s something we haven’t seen in the past. This means home buyers can enjoy the long-term stability of the 30-year fixed loan, while getting a low rate at the same time.

Learn more about these mortgage trends.

The bottom line here is that low interest rates will continue to motivate home buyers and homeowners alike, as we move into 2021. They’ll also help to sustain demand within the local housing market, at a time when inventory remains tight.

Disclaimer: This article includes real estate market forecasts / predictions for Walnut Creek, California extending into 2021. Those projections were issued by third parties not associated with our company. Housing forecasts are the equivalent of an educated guess.