Low inventory means higher prices for California’s housing market


The California housing market rebounded in June with the largest month-to-month sales increase in nearly 40 years, and California’s median home price hit its own record high, the California Association of Realtors said.

After the statewide median home price fell below $600,000 in May, it rose to $626,170 in June, which was up 2.5% from June 2019. This makes it the highest recorded May-to-June average, CAR said.

Existing single-family home sales totaled 339,910 in June on a seasonally adjusted annualized rate, up 42.4% from May and down 12.8% from June 2019.

Homes priced below $500,000 made up 48% of total sales in May 2020, but only made up 44% of all sales in June 2020. Sales of million-dollar properties, on the other hand, increased in market share to 18.1% in the most recent month compared with 15.6% in May 2020.

“A new record high in the statewide median price suggests that there is stronger housing demand from more qualified, affluent buyers in this extremely favorable lending environment,” CAR Senior Vice President and Chief Economist Leslie Appleton-Young said in a statement.

Meanwhile, year-to-date statewide home sales were down 12.9% in June.

“Home sales bounced back solidly in June after hitting a record bottom in May, as lockdown restrictions loosened and pent-up demand driven by record-low interest rates roared back,” said CAR President Jeanne Radsick in a statement. “While the momentum is expected to be sustained as we kick off the third quarter, the resurgence in coronavirus cases remains a concern and may hinder the market recovery in the second half of the year.”

Just about half of the counties tracked by CAR, 26 out of 51 to be exact, had a year-over-year loss in closed sales. Mono County had the highest decline by far, down 40%. Napa County trailed, going down 28.2%. 

As a response to the pent-up demand from the delay of home-buying season, median home prices in the Central Valley rose 7.4% from last year, CAR said. Home prices in Southern California also rose 3.3% from the year prior. 

Speaking of pent-up demand, housing supply continued to trend downward on a year-over-year basis as well, CAR said. Active listings fell more than 25% for the seventh month in a row and active listings sank 43%. 

Across the state, all areas had housing supply decline more than 30% from the year prior, CAR said. More specifically, Southern California had the biggest drop in supply, as for-sale listings fell 47.3% year over year.

CAR conducted a Google poll earlier this month that revealed 44% of consumers said it was a good time to sell, up from 40% a month ago, and slightly down from 49% a year ago.

Likewise, 31% of consumers said now is a good time to buy a home compared to the 23% who said the same thing last year.



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RE/MAX: The December housing market broke records


By one measure, December 2019 was the strongest close to the year of any year in the last decade.

RE/MAX released its National Housing Report for December 2019 last week, which revealed that the month posted a record finish to a year and the decade.

December finished with a year-over-year increase in home sales of 13.5% in the 54 metros it covers. This is the highest increase of any month in 2019, the report said.

It’s also the highest for the month of December since 2009.

And as sales increased, inventory fell. According to RE/MAX’s report, December saw a 14.5% year-over-year decline in inventory.

Consequently, there was a significant drop in the months supply of inventory. According to the report, there was only 3.3 months of available inventory on the market as of December 2019, compared to 4.8 months in December 2018.

“It was good to see the year-over-year spike in December home sales, indicating robust homebuyer interest,” said Adam Contos, CEO of RE/MAX.

“The strong December capped a solid second half of 2019, with year-over-year sales increases in four of the final six months,” Contos added. “The gains were largely attributable to low interest rates and high demand, and with those factors still in place, we expect sales to continue at a solid pace into the first part of this year.”

Interestingly, housing inventory grew year over year in the first six months of 2019, but shrank for the last six months of 2019, the report said.

The median sale price of a home was $266,000 in December, 11.1% higher than in December 2018. It also represented the highest year-over-year increase for any month of 2019.

Leaders of the year-over-year sales percentage increase were Birmingham, Alabama, up 34.3%; Burlington, Vermont, up 26.7% and Los Angeles, up 26.2%.

Average days on the market remained near the same level as the previous year, with days on the market in December 2019 for 54.

That’s up five days from November’s average but down one day from December 2018’s average.

The metro with the lowest days on the market were Omaha, Nebraska at 24. Homes in Des Moines, Iowa spent the most time on the market, at 110 days.



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