California Housing Market Edging Back to Normal

California Housing MarketCalifornia was one of the hardest-hit markets during the housing crash of the late 2000s, but the Golden State’s regional markets ended 2014 on a rather mixed note, with home sales moving up year-over-year for the first time in close to 18 months.

Data from the California Association of Realtors shows that sales of existing single family homes in the state were at 366,000 units in December 2014. This is a decline of 2.9 percent from November’s data, but up by 0.6 percent on a year-over-year basis. While this is an infinitesimal increase by any measure, this was actually the first annual increase for this metric since July 2013. For the entire 2014, there were also 383,320 single-family homes that closed escrow in California, a decrease of 7.6 percent from 2013’s revised total of 414,900.

2015 CAR President Christopher Kutzkey discussed the statistics in further detail in a statement, explaining that there were some parts of California where home sales were noticeably higher than the year before.

“Home sales were down on a statewide basis, with pockets of gains in sales activity, especially in Southern California and the Central Valley, where home sales were higher than the prior month and year,” he said, adding that things were different in the San Francisco Bay Area, where there were “run-ups in sales and prices” throughout 2014. “This market has tempered from its earlier frenzied pace mostly due to extremely tight inventory,” he added.

The median price of existing single-family detached homes in California had rebounded in December, ticking up by 1.7 percent to $452,570 from November’s value of $444,830. The figure is also 3.1 percent higher than the revised $438,790 median price from December 2013. Median home prices in California have been higher year-over-year for over two years, but price gains have thankfully moderated these past few months, which should bode well for potential home buyers in the area.

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According to CAR vice president and chief economist Leslie Appleton-Young, 2014 was a year where California’s housing market returned to “near normal” levels, as sales were moderately improved and home prices increased at a more reasonable, sustainable pace.

“Home prices have stabilized over the past year, which is positive news for buyers who have been putting off their home search until prices leveled off,” Appleton-Young continued. “And with recent news of an improvement in the job market and the lowest interest rates in a year and a half, buyers may be resuming their home search.”

Housing inventory was down in December 2014, as the available supply of existing single-family detached homes fell from 4.4 months in November to only 3.3 months in December. This represents the number of months required to sell the entire supply of properties on market, given the sales rate at the time. A normal market would traditionally have a supply of six to seven months.

As for the median time to sell a single-family home, the CAR’s report showed that it took a bit longer to do this in December, as the figure rose from 43.9 days in November to 47.3 days in December 2014. The year prior, it took only 40.4 days to sell such properties in California. Also, the CAR reported that homes in California sell at an average of 97 percent of the list price, down slightly from 98.1 percent at the end of 2013.