California’s housing market saw multiple shifts during 2020 as different sectors reacted differently and regulations changed with the times. When 2020 began, we already had high home prices and a construction deficit. The lockdowns of the pandemic propelled an economic recession that was already in the making, causing it to arrive faster than expected. Normally recessions cause a drop in prices, but the circumstances of this recession were forced, and therefore not necessarily subject to the same natural tendencies.
In the beginning of the lockdowns, real estate agents were not able to meet with clients or show property, causing the market to grind to a sudden halt. As the year progressed, regulations loosened somewhat, allowing showings under safe conditions. That prompted a spike in demand, as people who were itching to buy, especially with low mortgage rates, were finally able to start looking again. However, that did nothing to change available inventory. Inventory is low as a result of lack of construction, and what little construction there was being halted by lockdowns. In addition, most of the construction being done was for higher-end single-family residences, even as many prospective buyers were losing income due to the pandemic. With high demand and low inventory, prices simply continued to go up.
The market itself isn’t the only thing that changed, though. Prospective buyers are no longer looking for the same types of properties they wanted before 2020. If people are going to spend more time at home, they want the type of home that they’ll be happy living in. Move-in ready. Plenty of space. Home offices. Room versatility. It even extends to the outdoor amenities — houses with pools and outdoor living space are selling quickly, since people are able to be outside without leaving the confines of their property.