Are buyers finally resisting unrelenting price increases in the California home market?
Or, is it just that time of year for sluggish home sales?
“Flat is the new black,” said Madeline Schnapp, Director of Economic Research for Property Radar, in a statement about the group’s latest report. “Sales posted healthy increases in the first half of 2015 relative to 2014 but beginning in July, sales weakened as rising prices began to meet resistance from prospective buyers. That scenario is unlikely to change anytime soon.”
It could be either, neither, or some of both. Per Property Radar, October sales fell 2.9 percent to 35,182 from a revised 36,232 in September. Year-over-year, sales were down 1 percent from 35,541 in October 2014.
Year-to-date sales through October were up 6.5 percent compared to the same time period in 2014. Strong sales in the first six months of 2015 fueled that gain.
According to PropertyTrack, sales is one of the few areas that has not yet caught up to the strong numbers posted prior to the recent housing crisis. Sales currently remain 30 to 40 percent below 2002 through 2006 sales volumes.
The median price of a home in The Golden State in October was $407,500, nearly the same as a revised $407,000 in September. Prices peaked in July at $416,000 but have retreated to levels last seen in April 2015.
“The California real estate market has been surprisingly resilient,” continued Schnapp. “Sales while weak historically, remain higher than we’d expect given limited inventory. Prices are higher than we’d expect given virtually no wage growth. Despite a terrifying drought and financial and stock market volatility, things are quite stable, if not flat out boring.”
Price appreciation, also strong in the first half of the year and lagging of late, remains in the most affluent counties.
The counties with the largest price increases were Marin (11.1 percent), Monterey (5.7 percent) and Merced (2.4 percent). The counties with the largest price declines were Santa Barbara (-13.6 percent), Contra Costa (-5.1 percent) and San Mateo (-4.7 percent).
“On a monthly basis, prices have fallen in 17 of California’s 26 counties,” said Schnapp.
On an annual basis prices are still appreciating, but at a sluggish pace. On a year-over-year basis, the median price of a California home was up 4.9 percent from $388,500 in October 2014, down from an annual increase of 7 percent in October 2014, and a vigorous 25.2 percent in October 2013.
Further evidence of recovery from the housing market implosion is in the numbers of owners in distress or showing signs of struggle. In October, 545,000 of California’s homeowners were underwater, down from 1.2 million in October 2014. But not everyone is out of the woods: Foreclosure Notices of Default and Notices of Trustee Sale jumped 8.1 percent and 8.8 percent, respectively. Foreclosure sales, though, were nearly unchanged.
