The housing market in Southwest California had a strong year in 2020 despite the pandemic shutdown. Sales volume was the highest since 2010 with over 11,000 homes sold. Median and average home prices reached new peaks, with 259 homes selling for over $1 million, up from 174 in 2019. However, inventory remains very low with only 598 homes currently for sale, the lowest level since 2012. The low inventory coupled with continued high demand is expected to sustain price appreciation in 2021, though new policies and economic impacts from the pandemic could influence the market.

1. What a long, strange trip it’s been.
What a year that’s finally in our rear view mirror, eh? A year of ups and downs, possibly more of one than the other
depending on your perspective. A year of political shenanigans and chicanery that’s just winding down for one
administration and just winding up for another. New faces in DC and Sacramento, and even a few of you receiving
this letter for the first time. If it is your first time, congratulations. I’ll be sending this local housing summary out every
month with more information that you care to read. If you ever have any specific questions about some element of
our housing market, please don’t hesitate to contact me for details.
So let’s not waste another moment. Despite a nearly two month shut down of our industry, 2020 posted the
highest sales volume for our region since 2010! I know I forecast that we would come in above 2016 and just
under 2017, but December sales volume blew past my predictions and brought us in 40 units higher than 2017
(11,685 / 11,725). Still a bit off the 2010 pace of 12,216 but given the fact that we are essentially out of inventory to
sell, not a bad finish. What a year it might have been if we had adequate inventory and a wide-open market!! Of
course without the COVID push and adequate inventory, prices would not have appreciated as they did either.
If you remember back to Q1, our year started off strong. In spite of the pull-back in mid-March, we were off to our
best 1st quarter in years. With a very slow Q2 it was impossible to say where the market would be going. Our
national Chief Economist was forecasting a V shape recovery for housing, but even he was hedging his bets. But
once our market started to bounce back in June, we haven’t slowed down. We ended the year on a high note with
December sales volume not only a 10% improvement over November (1,033 / 1,149), but fully 25% higher that last
December (860).
Our median and average prices also ended the year on a surge. December median price was up a full 15% over
last December ($385,900 / $454,500), pushing the year to a 9% appreciation over 2019 ($386,413 / $424,422) and
more than double the regional median from 2010 ($198,862). Propelled by 134 sales of properties in excess of $1
million, Temecula established a new average price peak this year of $601,027, besting last year’s $555,320.
Murrieta posted 92 $million+ sales bringing their average price to $525,487, just $7,000 short of their record year of
$532,902 set in 2008. Menifee and Perris also set new average price peaks this year while other cities pulled within
a few thousand dollars of new records. Last year there were 174 sales in excess of $1 million, this year there were
259. Obviously COVID was not a detriment to everybody.
Again our scariest number is the inventory of homes for sale. With just 598 homes currently on the market, this is
our lowest inventory ebb since December of 2012 when inventory dropped to 581 units. Back then we had 2
months where sales exceeded inventory, this year sales have exceeded available inventory for the past 7 months.
Buyers today have just 1/3 the inventory of homes to select from than last December (1,720). Rather than being
measured in months, our inventory across the region is currently standing at just over 2 weeks. And we’re all aware
of what happens when you have strong demand with very limited supply (see previous paragraph re: pricing).
So what’s ahead for 2021? With interest rates continuing at record lows, urban and coastal buyers seeking larger
homes with offices and classrooms, and Millenials increasingly entering the housing market, there are no
prognosticators calling for any decline of the market in 2021, fueling the 12th year of our housing market run-up. Of
course we’re also likely to continue the trend of nearly 60% of California sellers seeking greener pastures out of
state, so that should help inventory a little. Our level of distressed properties, currently less than 1% of the market,
may also be impacted as we see increased business closures. We are fortunate in our region that nearly 70% of
our residents are homeowners. That means we’ll see less of an impact from eventual rental evictions and
foreclosures than areas like Santa Monica, with just a 22% rate of homeownership. It makes a difference.
And of course new policies out of D.C. and Sacramento will have an obvious impact. While we’re not yet sure of the
direction the federal government will take, Sacramento has already sent down 2 bills seeking to extend the rental
eviction moratorium through next December with no relief for landlords. Those sorts of things will leave a mark.
Well, here’s to you and yours for a healthy and prosperous 2021. 2020 hasn’t been all bad.

2. 1% 4%
17%
6%
11%
9%
3%
6%
7%
7%

3. Southwest California
Historical Record SFR Sales
I-15 Corridor
Southwest California
Historical Record SFR Sales
I-215 Corridor

4. Southwest California
Historical AVERAGE Price
I-15 Corridor
Southwest California
Historical AVERAGE Price
I-215 Corridor

5. Southwest
California
Reporting
Period
Current
Month
Last
Month Year Ago
Change from
Last Month
Change from
Year Ago
Existing Home Sales
(SFR Detached)
December
2020
1,149 1,033 860 10% 25%
Median Home Price $454,500 $454,278 $385,900 --% 15%
Unsold Inventory Index
(SFR Units)
598 738 1,720 19% 65%
Unsold Inventory Index
(Months)
0.6 0.7 2.1 14% 71%
Median Time on
Market (Days)
8.1 6.9 33.7 15% 76%
SW Market @ A Glance
Source: CRMLS

6. December 2020 SFR Transaction Value*:
Temecula $130,274,388 Lake Elsinore $58,796,978
Murrieta $133,459,992 Wildomar $25,882,600
Menifee $98,356,434 Canyon $17,992,948
Hemet $50,666,060 San Jacinto $19,669,300
Perris $26,452,900 Total $561,551,570
* Revenue generated by single family residential transactions for the month.
Year-Over-Year Median Price:
2019 2020 %
Temecula $490,000 $578,000 15%
Murrieta $446,000 $525,000 15%
Menifee $375,000 $436,000 14%
Lake Elsinore $389,900 $459,000 15%
Wildomar $420,000 $495,000 15%
Canyon Lake $430,000 $525,000 18%
Hemet $274,450 $335,000 18%
San Jacinto $307,000 $347,500 12%
Perris $340,750 $390,000 13%
November 2020 SFR Transaction Value*:
Temecula $127,751,649 Lake Elsinore $47,465,543
Murrieta $116,387,519 Wildomar $18,849,890
Menifee $73,292,643 Canyon Lake $27,741,489
Hemet $50,176,018 San Jacinto $19,705,350
Perris $27,547,778 Total $508,917,879
* Revenue generated by single family residential transactions for the month.

7. December Demand
Supply (738 - 598) 19%
Pending (1,168 - 918) 21%
Demand (1,033 – 1,149) 10%
Days on Market (6.9 – 8.1) 15%
Months Inventory (.7 - .6) 19%
Absorption (120% - 138%) 13%
Month over Month

8. Southwest California Homes
SFR sales I-15 corridor
Southwest California Homes
SFR sales I-215 corridor

9. 150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
600,000
Menifee Canyon Lake Hemet San Jacinto Perris
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
$550,000
$600,000
Temecula Murrieta Wildomar Lake Elsinore

10. City Median Sold $ Average Sold $ Average SqFt Bed Bath YrBlt
Temecula $578,000 $654,645 2,534 4 3 1997
Murrieta $525,000 $563,122 2,635 4 3 2001
Wildomar $495,000 $507,502 2,447 4 3 1998
Lake Elsinore $459,000 $459,351 2,197 4 3 2001
Menifee $436,000 $435,205 2,060 3 3 1999
Canyon Lake $525,000 $580,417 2,277 3 3 1990
Hemet $335,000 $329,000 1,771 3 2 1983
San Jacinto $347,500 $339,126 1,931 3 2 1997
Perris $390,000 $406,968 2,023 4 3 2000
Your 'Average' House, December 2020
By City
Source: CRMLS
Active
% of
MKT Sold
% of
MKT Active
% of
MKT Sold
% of
MKT Active
% of
MKT Sold % of MKT
Temecula 90 96% 188 94% 0 0% 2 1% 0 0% 0 0%
Murrieta 102 90% 220 93% 0 0% 0 0% 0 0% 0 0%
Wildomar 12 92% 48 94% 0 0% 0 0% 0 0% 0 0%
Lake Elsinore 54 96% 124 97% 0 0% 0 0% 1 2% 0 0%
Menifee 73 95% 212 94% 0 0% 0 0% 0 0% 3 1%
Canyon Lake 38 97% 29 94% 1 3% 0 0% 0 0% 1 3%
Hemet 133 96% 147 95% 0 0% 0 0% 1 1% 1 1%
San Jacinto 29 97% 56 97% 0 0% 1 2% 0 0% 1 2%
Perris 36 95% 64 98% 0 0% 0 0% 0 0% 0 0%
Regional
Average 567 95% 1,088 95% 1 0% 3 0% 2 0% 6 1%
December 2020 Market Activity
By Sales Type
Standard Sale Bank Owned Short Sale

11. Sales Median Price Revenue Sales Median Price Revenue
Temecula 127 $336,609 $42,673,162 125 $359,946 $44,993,250
Murrieta 294 $321,286 $94,458,102 326 $329,186 $107,314,636
Wildomar 0 $0 $0 0 $0 $0
Lake Elsinore 71 $246,827 $17,524,699 51 $256,078 $13,059,978
Menifee 36 $181,912 $6,548,842 36 $197,006 $7,092,216
Cayon Lake 19 $274,911 $5,223,300 14 $323,393 $4,527,502
Hemet 42 $140,204 $5,888,550 26 $149,265 $3,880,890
San Jacinto 11 $146,182 $1,608,000 9 $164,333 $1,478,997
Perris 6 $230,217 $1,381,300 5 $236,100 $1,180,500
606 $208,683.11 $175,305,955 592 $223,923.00 $183,527,969
2019 2020
Southwest California Homes
Condominium Sales
Sales Most Expensive Revenue Sales Most Expensive Revenue
Temecula 107 $4,000,000 $149,184,469 134 $3,100,000 $191,842,038
Murrieta 53 $3,200,000 $68,243,000 92 $2,600,000 $124,639,300
Wildomar 1 $1,125,000 $1,125,000 0 $0 $0
Lake Elsinore 0 $0 $0 1 $1,100,000 $1,100,000
Menifee 0 $0 $0 2 $1,200,000 $2,300,000
Cayon Lake 12 $1,213,575 $14,562,900 30 $2,200,000 $38,652,000
Hemet 1 $1,100,000 $1,100,000 0 $0 $0
San Jacinto 0 $0 $0 0 $0 $0
Perris 0 $0 $0 0 $0 $0
174 $234,215,369 259 $358,533,338
Southwest California Homes
$1 million + homes
2019 2020

12. 1. No trend lasts forever. Our current housing market is on a 12 year roll. Sooner or
later the run-up will stall and it’s a matter of debate as to when that will be and how
severe. Some were forecasting 2020 would be the year of the ‘housing adjustment’.
Maybe 2022. Maybe not.
3. Ignore short-term prognosticators. Every day brings a new series of headlines
based on some current event. Sales are down one month – housing is crashing.
Stock market is down today – economy is tanking. Stock market is up the next day
– rainbows and unicorns. Tariffs applied – worldwide economy is on the skids.
Tariffs not applied – worldwide economy is on the skids. If a short-term event
becomes a longer-term trend, start paying attention. (Like people and businesses
leaving California).
4. By the time the media starts reporting an honest downturn, we’ll already have been
in it for months, if not years.
5. Interest rates, forecast to be around 5% by this point in time, are about half that.
Look for interest rates to remain low for most of next year, possibly even a little
lower. Or higher.
6. Beware of the refinance trap. We’re in a critical period right now where most
homeowners finally have some equity built into their homes. Lenders are starting to
pitch the cash-out refi as a way to tap that equity. Those with long-term memory
loss will have forgotten (or not experienced) the debacle brought about by people
treating their homes like ATM machines and what that produced in the prior decade.
Today’s most egregious example (you hear it on the radio) is aimed directly at the
mathematically challenged. It encourages people to pull money out of their home
‘even if you just put it in the bank’. In other words, borrow your own equity and pay
4% interest to put it in the bank and earn maybe 1% interest. Makes sense to me.
NOT!
7. Unless you have insider knowledge, avoid putting a date certain and a number
in the same sentence. Saying ‘Interest rates will hit 6% by September 15’ is just
asking for trouble and reduces your credibility if it doesn’t happen. Employ the
terms ‘in all likelihood’, or ‘given current economic constraints’ to qualify your
forecast. Of course if it does happen you look like a genius, but the sad fact is most
people don’t listen to you to begin with and don’t remember what you said 5
minutes after you leave. So you’re probably safe either way.
8. Stay tuned to this newsletter for your most accurate LOCAL housing numbers. The
raw numbers tell us a story if we know where to look. And how. And why.
2021 Trends to Watch For