Unsold Houses Piling Up In CA: 'Ripe For Home Value Declines'

CALIFORNIA — Unsold housing inventory in California is at levels not seen since before the coronavirus pandemic, up 37 percent year-over-year, according to Compass Chief Economist Mike Simonsen.

Simonsen took to social media this week to ask his followers on X, “Why now?”

“We know why inventory is climbing in FL, TX, AZ, etc. (migration is way down, fewer buyers moving from the northeast.),” Simonsen wrote in the X post.

“But CA has had net negative migration for a long time and inventory stayed low much longer than those other states.”

After crowd-sourcing in the comments, Simonsen cited two theories he thought plausible: rapidly deteriorating employment in the Golden State and needed cash programs coming to an end.

Reventure App CEO Nick Gerli also considered the question of high inventory earlier in the month, noting in an X thread on July 10 that housing inventory in the state was at 76,000 listings, “quite high relative to demand.”

“That combination creates an environment ripe for home value declines,” Gerli wrote, noting Zillow had shown values dropping over the previous four months.

Reventure projected values in California would decline 3 percent in the next year, according to Gerli.

The median household in the state must spend more than 62 percent of gross income to afford the mortgage and taxes on a purchased home, Gerli noted in a separate July 7 thread on X.

“In the end, California's housing market will likely continue to struggle until affordability improves,” he wrote.

As of Friday, the average home value in the Golden State was $786,107, according to Zillow.