New Trends Open Doors in the California Housing Market

Apr 13, 2021

When large sectors of the economy stalled last spring, there was widespread concern that the U.S. housing market would become mired in a recession due to COVID-19 restrictions. Real estate activities faltered in March and April of 2020, but home sales quickly rebounded as the industry proved resilient with the ability to shift more essential business processes online. 

In the final analysis, 2020 was a record-breaking year for the nation’s housing market and exceptionally strong growth is expected again in 2021. As we enter the high season for home buying this spring, real estate markets in major metropolitan areas of California are expected to be bustling, especially for families with children who want to be situated in a new home before school reopens for in-person classes. Although buying a home in the state’s most affluent areas remains highly competitive, recent developments in economic conditions have been driving some exciting changes that offer excellent advantages for challenged buyers that have previously found themselves priced out.

With the growing acceptance of remote work and interest rates at near historic lows, many buyers will find that they have a greater number of options that will make home ownership more affordable in 2021. For those waiting for the right time to get into the residential real estate market, we’ve identified some important insights to have on your radar this home buying season.

City dwellers are moving to smaller towns

The ability to telecommute provides a means by which many who currently live and work in urban hubs can easily relocate to rural and suburban areas, where prices are typically lower and real estate inventory is higher. Economists have already perceived shifts in lifestyle and priorities brought about by the coronavirus pandemic, which has been fueling this “urban flight” from big cities to smaller towns. As explained by Louis Hansen in The Mercury News, buyers are now less concerned with their daily commutes, and more focused on personal space. In particular, the pandemic has underscored the desire for more ample office space and outdoor family space.

Migration is occurring inland

The outlying suburban areas of the greater Bay Area as well as Sacramento have been named as popular regions for relocation among those living in densely populated cities like San Francisco. More generally, there will likely be an increase in buyers moving from coastal regions to areas further inland. According to a report from Tessa McClean from SFGate, an Oakland-based Redfin agent pointed to Lafayette-Moraga-Orinda as an area that has been attracting interest among buyers who might otherwise settle in cities such as Oakland or Berkeley. In his August 2020 article,  “5 Predictions for the California Housing Market in 2021: Sales, Prices & More,” Brandon Cornett from the Home Buying Institute also singled out the Inland Empire (Riverside and San Bernardino counties) as a potential market that might experience an increase in demand and home sales. When it comes to movement from the San Francisco Bay Area to Sacramento, he suggests the Bay Area might actually experience a decline in home sales as activity increases in the Sacramento area.

A possible rise in inventory is on the horizon

While the housing shortage remains a reality in California, some industry insiders foresee a gradual increase in inventory levels as the market corrects for circumstances that occurred in the fallout from the pandemic. Mashvisor, a provider of real estate investment data analysis, explains that the in addition to a slowing of construction activities, some sellers took their homes off the market in 2020 to wait out the pandemic. At the same time, the firm emphasizes that we should not expect to see a major increase in California housing inventory in the near-term.

A slowing of appreciation in the San Francisco Bay Area  

Although median home values in the Bay Area housing markets are among the highest in the nation,  price growth has begun to slow in recent years. As reported by The Mercury News, Redfin chief economist Daryl Fairweather expects home price appreciation to remain behind that of the 5 percent growth projected for the overall U.S. market in 2021. Fairweather and others point to the slackening of the condo market as a factor contributing to this regression, a phenomenon that has been occurring as more people leave city apartments and condos for bigger homes in the suburbs. According to Fairweather, prices on condos will drop sufficiently to make them a good value, until more people recognize the investment opportunity and begin to snap them up.

A few considerations if it’s time to make your move in the real estate market

As much as we continually hear that California real estate is a seller’s market, there are valuable advantages for potential buyers right now that seem to be creating a more balanced picture, especially for those whose lifestyle affords them some flexibility. With interest rates close to record lows and the promise of schools reopening for in-classroom learning this fall, the spring and summer of 2021 may be an opportune time to start building your future financial security through home ownership.

But before you begin your home search, it is critical to get preapproved for a mortgage loan, unless you’re prepared to make an all-cash offer

Preapproval demonstrates that you’re qualified for a mortgage for a specific amount, and that a lender has done a fairly thorough investigation of your finances. Taking this important step establishes your credibility as a serious buyer and can afford you a more aggressive escrow period.

Sellers and real estate agents are often reluctant to deal with buyers without preapproval, and in many cases, they’ll refuse to consider a bid from someone without one, preferring to entertain offers from those who seem a safer bet. However, there are other important benefits of mortgage preapproval. For instance, you’ll get a clear sense of exactly how much home you can afford, so that you don’t set yourself up for disappointment, or waste time looking at homes that are out of your price range. In addition, preapproval speeds up the entire loan process. The ability to offer a quick closing appeals to sellers, who may be more inclined to accept your offer over others for this reason.

Of course, it’s also wise to check your credit before you apply for a mortgage, in order to give yourself a chance to correct mistakes and make any improvements that can significantly increase your score. A higher credit score can make a home more affordable, since even a small variation in interest rates can affect the amount of your monthly mortgage payment, as well as the total amount of points you pay at closing.

While credit scores are certainly important when it comes to consideration for a mortgage, keep in mind that some lenders, and especially financial institutions like your credit union, will consider all variables when making a determination about whether to approve you for a loan, and for what amount.

To help make it easier for our members to obtain the financing they need, The Police Credit Union provides a number of solutions, including the ability to accept gifted funds for a down payment as well as programs with down payments as low as 3% of the purchase price. In addition, we offer highly competitive rates, low fees, and a number of mortgage options to fit different budgets and lifestyle goals.

If you’re ready to start exploring your options,
apply by phone at 800.222.1391 and press 4 to be transferred to the Mortgage Department, or send an email to

Get Started

Providing Financial Solutions to Take Care of Our Own

  • Accessibility
  • Federally insured by the National Credit Union Administration
  • Equal Housing Opportunity
  • NMLS ID# 409710

APR = "Annual Percentage Rate". Actual APR is based on your credit profile and may be higher than the lowest rate available. Posted rates may include promotional discounts and other terms and conditions. APY = "Annual Percentage Yield". Rates are subject to change without notice.

The Police Credit Union proudly provides banking and loan solutions including checking accounts, credit cards, auto loans and more for police and other law enforcement agencies and their families  in the Bay Area and beyond. Visit us at one of our branches in San Francisco, Pleasanton, San Mateo, San Bruno or Oakland, CA or check if you are eligible for membership and apply online today.

Site Design by ZAG Interactive. © 2019 The Police Credit Union.