As explained in a recent article from The Mercury News, this past September, the California housing market recently posted its largest annual sales decline since March 2014. For the second month in a row, home sales have fallen below the 400,000-level benchmark, proving that potential buyers are indeed delaying their plans to purchase homes, according to the California Association of Realtors.
During September 2018, closed escrow sales of single-family homes in California totaled just 382,550 units, down 4.3% from August and down 12.4% from September 2017. At the same time, the statewide median home price fell to $578,850 in September, down from $596,410 in August and $555,400 in September 2017.
Real estate professionals believe the market slowdown can be blamed on a number of factors, including rising interest rates, high home prices, and the new tax reform law as well. CAR president Steve White was quoted in the article, saying, “The housing market continued to deteriorate and the decline in sales worsened as interest rates remained on an upward trend… Tax reform, which increases the cost of homeownership, also is contributing to the decline, especially in high-cost areas such as the San Francisco Bay Area and Orange County.”
With price appreciations slowing down over the last several months, inventory has increased dramatically since June, when the statewide median price reached a new high, according to CAR senior vice president and chief economist Leslie Appleton-Young. Appleton-Young explained, “Buyers are becoming increasingly concerned about market developments and are reluctant to purchase at the prevailing market price. As such, the deceleration in price growth will likely continue in coming months.”
Interestingly, Bay Area sales dropped by a shocking 16.4% from September 2017, demonstrating the largest decline since October 2010. Meanwhile, home sales in Santa Clara County decreased 22.2% from August, and 22.6% YoY.
Several other counties also experienced dramatic YoY declines in sales, including Sonoma (-19.4%), Solano (-19.3%), Contra Costa (-17.3%), San Mateo (-14.6%), Napa (-14.2%), San Francisco (-11.5%), and Alameda (-10.5%).
Despite rising home prices in the Bay Area, CAR reports that appreciation rates have slowed noticeably since the first half of 2018. In fact, in September 2018, the Bay Area’s median price increased by just 9.8% YoY, much lower than the average growth rate of 14.9%.
Consequently, statewide active listings increased for the sixth consecutive month, up by 20.4% YoY, making September’s listings increase the largest in almost 4 years’ time. With a 44% increase YoY, the Bay Area experienced the largest increase in active listings. Active listings in Santa Clara County even rose by 113% since September 2017.
President of the Silicon Valley Association of Realtors, Bill Moody, said, “We’ve always said real estate is a cycle and while we’re not concerned about a downturn, this shift in the market indicates buyers may have more negotiating power now than a year ago… The time to buy or sell is the right time for you, what’s best for your situation and for your family.”
(Read the full article on The Mercury News.)
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