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Buying a House in California: An In-Depth Guide

If you’re looking to buy a home in California, there are a number of things you might be worried about, from what you can afford in your target market to how to find your dream home. Here’s what you need to know to get through the home buying process in California.
If you’re looking to buy a home in California, there are a number of things you might be worried about, from what you can afford in your target market to how to find your dream home. Here’s what you need to know to get through the home buying process in California.

It’s natural to worry about all of the various things that go into buying a home. Buying a house can be a stressful and daunting process, especially for first-time buyers and especially in markets as large and complex as California’s.

But never fear, we’ve got you covered! For more about the home buying process in California, from finding a realtor, to the current market, and calculating things like property tax and closing costs, keep reading.

How to Find a California Buyer’s Agent

The first step for every prospective property buyer should be partnering with a great, local real estate agent. A good buyer’s agent will provide you support and guidance throughout every step of the home buying process.

When looking for the right real estate agent, there are some traits you can look for to help your evaluation. Every buyer needs a realtor who puts them at ease, is proactive, has local experience, and is a good communicator and expert negotiator.

If you’re looking to buy property in California, Clever can instantly connect you with a top-rated agent in your local market. Get in touch with a Clever Partner Agent for a no-obligation consultation.

Learn More: What Does a Real Estate Agent Do for a Buyer?

California Housing Market Forecast for 2019 — and Beyond

The California real estate market, like California itself, exists in extremes. Between Silicon Valley, San Francisco, Orange County, and Hollywood, California is home to some of the most expensive real estate in the country. But that doesn’t mean there aren’t places for everyday Americans to live in this large and diverse state.

The median home value in California is $548,700, nearly double the U.S. median of $226,700, and the third highest median price in the country, after Hawaii and Washington, DC. And within California, some local medians are much higher. The median home value in San Francisco, for example, is over $1.3 million. Want to live in Beverly Hills, 90210? You’re looking at a median home value of over $4.9 million.

Overall, the California right now is a buyer’s market, though it’s also home to some of the most sought-after zip codes in the country. The median California home value has gone up 2.6% over the last year and will likely rise another 2.0% in the next year.

Always do research into the specific part of California you’d like to live, because what you can find for your budget can be incredibly different, even within different parts of the same city. Be sure to discuss where you’d like to be and what you’re looking for with your real estate agent.

Best Time of Year to Buy a Home in California

There are a few different ways you can try to time the California market, based on your needs and goals. The best time to buy a house varies based on the specifics of the local market, especially in a state as large and diverse as California. If you’re looking for the specifics on a particular part of California, ask your agent when the best time is in your town or neighborhood.

Goal: Dream Home

If your goal is to find your dream home and you have some flexibility with regard to price, spring is the time to buy. California sees by far the largest number of homes put on the market between April and June.

However, although home supply is high from April to June, demand is even higher. Spring is by far the most popular time for buyers to look. Families with children like to move over the summer, to not disrupt the school schedule. And everyone wants to be settled into their new homes before fall and winter hit.

Homes listed in the spring are more likely to see multiple bids, a quick sale, and a higher sale price than homes listed the rest of the year.

Goal: Best Price

If you can wait until winter to buy in California, that’s when you’re likely to see the best deals. Many sellers who list their home over the winter, before the hot spring selling season begins, need to sell their house as fast as possible. This leads to discounts and less competition with other buyers.

Middle Ground

For a middle ground between cold winter and ultra-hot spring, consider looking in the late summer and early fall. This is when many homeowners whose property didn’t sell during spring or summer start to lower their prices and are more willing to give you concessions during negotiations.

Learn More: The Best Time to Buy a House in California

Calculate Your Property Taxes in California

Property tax is a major source of revenue for state and local governments. Real estate is often taxed at the state, county, and city levels.

The amount of property tax you pay is based on the value of your property and any structures on it. The assessed value of your property is multiplied by the property tax rates of your state and local governments.

California property taxes are notoriously difficult to calculate and vary widely throughout the state. Many cities have their own tax laws and regulations, in addition to those imposed by the state.

The standard real estate tax rate in California is 1%, meaning you’ll pay 1% of your property’s real value in property taxes to the state. California properties are reassessed annually, but the reassessment is limited to adding no more than a 2% increase to your property taxes per year. The median home value in California is $548,700. An owner of a home at that value would pay a 1% tax to the state of California of $5,487.

Your total tax liability will depend on where in the state you live. Property owners also have to pay county and possibly city real estate taxes. In San Diego County, the average tax rate is 0.781%, adding another $4,285 to a median homeowner’s property tax bill. In Sacramento County, however, the average tax rate is 0.949%, adding $5,207.

The city, county, and even zip code you buy in will affect your total property tax liability. Make sure you talk to your realtor about what to expect in the particular area your looking in. A good realtor will also likely be able to recommend you to local CPAs and property tax experts, if necessary.

Learn More: The Ultimate Guide to California Real Estate Taxes

How Much Are Closing Costs for Home Buyers in California?

Closing Costs

The money you put down when buying a house is more than just the down payment. Closing costs can add up quickly, because they cover a wide variety of things, including:

  • Recording fees;
  • Title policies;
  • Notary fees;
  • Wire fees;
  • Attorney fees;
  • Transfer taxes;
  • Inspections;
  • Endorsements;
  • Loan origination fees;
  • Couriers or delivery costs;
  • Home protection plans;
  • Homeowners insurance;
  • Prepaid interest;
  • Property taxes;
  • Natural hazard disclosures; and
  • Escrow or closing costs.

Transfer taxes (part of your closing costs) are another cost that varies based on where you are in the state. The tradition in Northern California is for the buyer to pay the tax, where the tradition in Southern California is for the seller to pay.

Closing Costs in California

Generally, buyers can expect to pay between 1% and 3% of the property’s sale price for closing costs. For a buyer of a median $548,700 home, closing costs would like be in the range of $5,487 and $16,461.

First-time buyers and low income buyers may qualify for assistance with closing costs and/or down payment through federal, state, and/or local homeownership programs. For example, HUD, state and local governments, and nonprofits all offer assistance for first-time and low income buyers.

Closing costs and taxes vary based on state, city, and county. Consult with an expert to get the low-down on what to expect in your part of California.

Learn More: Who Pays Closing Costs on a House?

Clever Will Help Pay Your Closing Costs!

If you want to work with a top local agent and get a rebate on your closing costs, consider working with a Clever Partner Agent. Clever Partner Agents are all top-rated in their locations and offer on-demand showings to fit your schedule. In addition, Clever buyers in California who spend $150,000 or more can get a $1,000 rebate to help cover their closing costs.

Fill out our online form today to talk to an experienced California realtor for a no-obligation consultation.

Learn More: How to Get a Home Buyer Rebate

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Jamie Ayers

Jamie is the Director of Content at Clever Real Estate, the free online service that connects you with top real estate agents and helps you save thousands on commission. In the past, Jamie has managed columns for clients in a variety of leading business publications, including Forbes, Inc., CEO World, Entrepreneur, and more. At Clever, Jamie's primary goal is to provide home sellers, buyers, and investors with the information they need to successfully navigate the ins and outs of the real estate industry.

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