California Home Sales Off to Slowest Start Since 2008

PropertyRadar - May 20, 2016 – California single-family home and condominium sales were 35,978 in April 2016, an increase of 5.8 percent from a revised 34,002 in March 2016. On a year ago basis, sales were down 8.3 percent from 39,219 in April 2015, the lowest April sales volume since 2011.

Year-to-date sales (January through April 2016) totaled 117,235, down 4.5 percent from the same time period in 2015 and was the second lowest January through April sales volume since 2008.

Of the total number of homes sold in April 2016, 20.0 percent were condominiums and 80.0 percent were single-family residences.

“We are well into the spring selling season and sales volumes are still near their lowest levels since 2008,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “The lack of inventory means the tug-of-war between inventory and price will likely continue for the foreseeable future. While authorized building permits in California are approaching the highest levels since 2007, new inventory of any volume won’t arrive until 2017 or 2018.”

The April 2016 median price of a California home was $432,500, up 5.5 percent from a revised $410,000 in March 2016. On a year-ago basis, median home prices were up 6.8 percent from $405,000 in April 2015. The median price of a condominium was $413,000, up 2.0 percent from $405,000 in March 2016 and up 6.4 percent from $388,000 a year ago.

“Prices jumped this past month as seasonal pent-up demand slammed head-on into an inventory constrained market,” said Schnapp. “Although California is still finding buyers, there’s no question that at some point, and perhaps happening now, buyers are going to put their hands up and sit tight or even consider out-of-state options.”

Within the 26 largest California counties, the highest year-over-year price appreciation occurred in the Northern California counties of Santa Clara (16.3 percent), Merced (13.9 percent), Sonoma (13.7 percent), Monterey (13.4 percent), Alameda (11.6 percent) and Marin (11.1 percent).

Cash sales of single-family homes and condominiums in April 2016 gained 0.3 percent from March 2016 but were down 11.0 percent from April 2015. April cash sales were 21.0 percent of total sales, in line with the average percentage of cash sales over the past 12 months. Within the 26 largest counties in California, the counties with the highest percentage of cash sales were Santa Cruz (29.8 percent), Monterey (26.8 percent), Marin (26.7 percent), San Francisco (26.3 percent), and Fresno (25.1 percent).

“Despite low inventory and high prices, cash sales continue to be an integral part of the market,” said Schnapp. “The lure of a positive return on investment in a yield starved environment has proven attractive to investors looking to deploy cash in real estate.”