California Yearly Home Sales Down 11.4% Y-o-Y, Median Prices Unchanged Since May 2014

December California single-family home and condominium sales increased 7.0 percent to 27,770 units, up from 25,964 in November but down 11.4 from 31,340 in December 2013. Total sales for the entire year (January through December) fell 11.7 percent from 2013 and were the lowest since 2007.

“As we predicted early in 2014, sales volume stayed near 7-year lows throughout 2014 because prices rose too far too fast in 2012 and 2013,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “While prices are likely still too high, 2015 may fair slightly better thanks to mortgage interest rates trending lower and loosening lending standards.”

The December median price of a California home was nearly unchanged at 385,000 dollars, down 2,500 dollars, or 0.6 percent from 387,500 dollars in November. Median prices have been more or less unchanged since May 2014 when the median price peaked at 390,000 dollars. On a year-ago basis, median home prices were up 5.5 percent.

The number of homeowners in a negative equity position fell 1.1 percent to 987,000 in December, from 998,000 in November. In December, approximately 11.4 percent of California homeowners owed more than their home was worth, down from 1.4 million, a decline of nearly 28.5 percent from a year ago.

“The California real estate market continues to show steady improvement,” said Schnapp. “Nearly one in three homeowners with negative equity in 2014 saw their finances improve significantly as they transitioned from negative to positive equity this past year. Many homeowners are now free to participate in the real estate market or refinance their homes.”

Consistent with the overall increase in December sales, cash, flip, and institutional investor sales posted increases in December. Foreclosure notices also posted increases for December. Specifically:

Cash sales were 6,127 in December up 5.0 percent from November and were 22.1 percent of total sales. Despite the uptick in December, cash sales have been steadily declining since reaching a peak of 40.0 percent of total sales, or 14,028, in August 2011. Since then, cash sales have fallen 56.3 percent. Within the 26 largest counties in California, cash sales as a percentage of total sales, were highest in Sacramento, Riverside, and San Diego counties.
Flip sales totaled 969 in December, gaining 1.9 percent for the month, but were down 36.0 percent for the year. Flip sales are defined as properties that have been resold within six months. Flip sales comprised 3.5 percent of total sales in December, down 0.1 percent from November. Flip sales peaked in May 2013 at 5.1 percent of total sales and have declined 49.0 percent since then. Within the 26 largest counties in California, Fresno, Sacramento and Los Angeles had the highest percentage of flips at 5.7, 4.5 and 4.3 percent, respectively.
Institutional Investor LLC and LP purchases totaled 1,030 in December and were up 13.6 percent for the month but down 18.8 percent from December 2013. Volatility is normal this time of year and will likely subside in ‘Q1 2015. Over the longer term, however, as the supply of distressed properties dwindled and prices rose, institutional investor demand retreated due to the lower return on investment. In general, Institutional Purchases have posted consistent monthly declines since peaking in December 2012 and are down 53.6 percent since then. Similarly, Trustee Sale purchases by LLC and LPs are down 82.7 percent from their October 2012 peak.
Foreclosure starts, Notices of Default (NODs), increased 8.1 percent between November and December but are down 14.3 percent from December 2013. The monthly increase is likely due to increased volatility around the holiday season. Foreclosure Sales gained 6.9 percent for the month but were down 21.6 percent for the year. Over a longer period, both foreclosure notices and sales have been trending lower.