Lack of inventory, both affordable and overall, remains an issue for California homebuyers, and price continues to climb in response.
For the second straight month, median home price grew above $500,000 while California home sales dropped annually, according to the California Association of Realtors’ (CAR) statewide report.
Sales of single-family detached properties dropped by 3.2 percent year-over-year. The effects of California’s tight market appear to be hitting the pricier ZIP codes more dramatically.
“Affordable areas, such as the Inland Empire and Central Valley, where housing supply is relatively more abundant, are outperforming the San Francisco Bay Area, where thin housing availability is hampering home sales,” CAR President Pat “Ziggy” Zicarelli said in a statement. “In fact, eight of that region’s nine counties experienced a sales decline from the previous year.”
CAR
The short-term progress of California home sales is somewhat more flattering. For the third month in a row, statewide sales grew over 400,000. May showed a 0.6 percent rise in sales from April, reaching a seasonally adjusted annualized rate of 410,090 homes.
California home sales costlier
Under supply helped boost median sales price, which CAR says grew 1.8 percent — from $509,590 to $518,760 — between April and May.
The new price reflects a 6.3 percent jump from last year, demonstrating increased competition from fewer homes on the market for Golden State buyers. Price is still below its pre-recession peak of $593,530, reached in May 2007.
“Constrained inventory, low affordability, and regional disparities will be a drag on this year’s market outlook, which is forecast to see a 1.3 percent growth in sales and a 5 percent increase in the median home price,” said CAR vice president and chief economist Leslie Appleton-Young in a press release.
More effects of declining inventory
CAR’s Unsold Inventory Index shows supply dropping from 3.5 to 3.4 months between April and May, despite active listings increasing by 5.8 percent. Last year, supply in May was at 3.5 months.
Historically, the average home supply in California is 6.1 months, meaning May 2016’s supply was around 40 percent below long-term average.
CAR
Time on the market for California home sales dropped from 27.9 days in May 2015 and 27.7 days in April 2016 to 27.3 days last month.
List-to-price ratios are also helping California sellers close to asking price, CAR says, with sales price reaching an average 99.7 percent of listing price. In April, sellers received 99.3 percent of asking on average.
Par for the course, San Francisco County held the steepest price-to-size ratio in the state at $856 per square foot. Second was San Mateo County at $826 per square foot, followed by Santa Clara County at $638 per square foot.
