California Update
California market conditions are recovering on average much better than the rest of the nation, with incomes much more aligned with current home prices, according to experts. Unlike the rest of the oversupplied nation, California housing inventory stands at only 5.0 months on hand, a sellers market by most standards. The exception being properties priced above $2 million, where the housing inventory remains oversupplied compared to current sales rates.
That’s why most buyers shouldn’t wait. It would take an extraordinary influx of distressed homes or loss of more jobs in a given market for prices to go much lower, and with inventory levels at their scarcest in years, particularly in conforming loan ranges, it’s unlikely prices will give much ground.
For home buyers, pricing pressure means greater affordability. Even while interest rates slowly climb, prices are unlikely to follow very quickly.
In December 2010, California housing sales volume and prices declined 6.9% and 1.6% respectively, resulting in a median home price of $302,900 compared to $306,860 in December 2009- But December sales were 5.9% higher than Novembers, suggesting that the post-stimulus slump may be over.
“While sales rose in December, the sales pace in the second half of the year was lower than the first half as the housing market weaned itself off home buyer tax credits,” explained California Association of REALTORS® Vice President and Chief Economist Leslie Appleton-Young. “For 2010 as a whole, sales reached 494,900 homes sold, down 9.5% from the 546,860 homes sold in 2009. However, the statewide median price increased 10.2% to reach $302,900 for the year, up from the $275,000 recorded in 2009,” she said.
This means that California home buyers have an opportunity to buy at a significant discount. While home prices haven’t retested the lows of 2009, prices are still far off the highs of 2007.
The California Association of REALTORS® Traditional Housing Affordability Index, which measures the percentage of households that can afford to purchase a median-priced home in the state, says affordability improved greatly between Q4 2009 and Q4 2010.
More than 50% of qualifying households can buy a median-priced home in the state, up from 47% in Q4 2009. And 49% of households could afford the median-priced home in Southern California, up from 46% in Q4 2009.
Santa Barbara County - 36% in Q4 2010, up from 30% in Q3 2009
Ventura County – 41% in Q4 2010, up from 39% in Q4 2009
Los Angeles County – 39% in Q4 2010, up from 35% in Q4 2009
Orange County – 37% in Q4 2010, up from 33% in Q4 2009
San Diego County - 40% in Q4 2010, up from 38% in Q4 2009
As we move into the traditional “spring home buying season,” the decline in the inventory of unsold homes is leveling off, and days on the market in our four sample cities is showing a tick downward.
Meanwhile, the “median” prices of homes in the same cities are still receding a little.
Remember these charts reflect all price ranges including $million plus properties that can take over a year to sell today. For a better picture of the “inventory” of available OC homes broken down by price range see the first charts on the links below.
(“Inventory” is described as the amount of time it will take to sell all the homes based on the current rate of sales. A “balanced” market is generally considered to be about 6 months; less than that is a “seller’s market” and more than 6 months is a “buyer’s market”).
Search for properties in all of Orange County
Search for Bank-Owned or Short Sales In South OC (from Aliso Viejo to Coto de Caza to San Clemente)
