October Pending Home Sales

October Pending Home Sales

California pending home sales drop to lowest level in six months in October, portending market softening as year winds down, C.A.R. reports

LOS ANGELES (Nov. 22) – California pending home sales shrank for the fourth consecutive month in October to post the lowest level in six months, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Even with the homebuying season winding down, REALTORS® reported slight increases in floor calls, open house traffic, and listing appointments/client presentations compared with a year ago, C.A.R.’s October Market Pulse Survey** found.

Pending home sales data:

  • Based on signed contracts, year-over-year statewide pending home sales dropped in October on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* declining 2.6 percent from 119.1 in October 2016 to 116.0 in October 2017. California pending home sales were also down on a monthly basis, decreasing 3.3 percent from the September index of 120.0.  

  • Pending home sales have declined on an annual basis for nine of the last 10 months so far this year. After a solid run-up of closed sales in May, June, and September, a continued scarcity of housing inventory, which drove up home prices, may squeeze the market heading into the closing months of the year.

  • At the regional level, the Central Valley Region recorded an increase in pending sales from the previous year. Within Central Valley, pending sales dipped 0.8 percent in Kern County and fell 6.6 percent in Sacramento County compared to a year ago.

  • The San Francisco Bay Area experienced the largest drop in pending sales, falling 10.5 percent from October 2016. San Mateo, Santa Clara and Monterey counties were all down by 10.9 percent, 21.4 percent, and 3.2 percent, respectively. San Francisco County was the anomaly with pending sales rising 15.1 percent from a year ago.
     
  • Pending home sales were down 7.3 percent from October 2016 in Southern California. Los Angeles and Orange counties registered lower annual pending sales of 4.7 percent and 4.9 percent, respectively. Double-digit, annual pending sales drops occurred in Riverside (14.0 percent), San Diego (11.4 percent), and San Bernardino (10.4 percent) counties.

  • C.A.R.’s Market Velocity Index – home sales relative to the number of new listings coming on line each month to replenish that sold inventory, or market indicator of future price appreciation – suggests that there continues to be upward pressure on home prices through the fall. Home sales continue to outstrip new listings coming online to restock sold units.

  •  The Market Velocity Index rose from 40 in October 2016 to 75 in October 2017, implying that there were 75 percent more homes sold than new listings, meaning the supply of homes available for sale continued to drop.

 Year-to-Year Change in Pending Sales by County/Region

County/Region/State

Oct. 2017

Oct. 2016

Yearly % Change

Counties

 

 

 

Kern

62.9

63.4

-0.8%

Los Angeles

78.2

82.1

-4.7%

Orange

67.8

71.3

-4.9%

Riverside

46.2

53.7

-14.0%

San Diego

109.5

123.6

-11.4%

San Bernardino

63.3

70.6

-10.4%

Monterey

59.7

61.7

-3.2%

Sacramento

63.8

68.3

-6.6%

San Francisco

111.2

96.7

15.1%

San Mateo

96.0

107.7

-10.9%

Santa Clara

70.6

89.8

-21.4%

Santa Cruz

123.4

110.9

11.3%

 

 

 

 

Regions

 

 

 

San Francisco Bay Area

129.9

145.1

-10.5%

Southern California

93.7

101.0

-7.3%

Central Valley

88.6

84.2

5.1%

 

 

 

 

California* (SA)

116.0

119.1

-2.6%

* Seasonally adjusted

 

October REALTOR® Market Pulse Survey**: 

  • The share of homes selling above asking price fell from 28 percent a year ago to 23 percent in October, while the share of properties selling below asking price inched up from 44 percent to 46 percent. The remaining 30 percent sold at asking price, up from 28 percent in October 2016.

  • For homes that sold above asking price, the premium paid over asking price dipped from 9 percent in October 2016 to 8 percent in October 2017.

  • The 28 percent of homes that sold below asking price sold for an average of 12 percent below asking price in October compared to 9 percent a year ago.

  • Two-thirds (66 percent) of properties sold in October received multiple offers, and the number of offers received was up slightly at 2.6 offers in October 2017 compared to 2.3 offers a year ago.

  • The share of properties receiving three or more offers in October was 41 percent compared to 30 percent a year ago. 

  • Market competitiveness increased the most in lower- and mid-priced homes compared with last year. Fifty-eight percent of homes priced $200,000-$299,999 received three or more offers, up from 23 percent a year ago, and 59 percent of homes priced $500,00-$749,999 received three or more offers, up from 21 percent in 2017.  

  • Listing price reductions crept up from 31 percent a year ago to 32 percent in October.

  • Declining housing affordability/inflated home prices/rising interest rates was the top concern of more than 4 in 10 (44 percent) REALTORS® compared with 45 percent a year ago. More
    REALTORS® cited a lack of available homes for sale as their top concern at 30 percent in 2017 compared with 26 percent last October. A slowdown in economic growth, lending and financing, and policy and regulations rounded out REALTORS®’ remaining biggest concerns.

  • REALTORS®’ expectations of market conditions over the next year have largely remained flat over the past few months, hovering in the low 50s but is still in positive territory.

Follow us on Twitter @CAR Media and @CAREALTORS®
Like us on 
Facebook, and check us out on Instagram.

*Note:  C.A.R.’s pending sales information is generated from a survey of more than 70 associations of REALTORS® and MLSs throughout the state. Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market. A sale is listed as pending after a seller has accepted a sales contract on a property. The majority of pending home sales usually become closed sales transactions one to two months later. The year 2008 was used as the benchmark for the Pending Homes Sales Index. An index of 100 is equal to the average level of contract activity during 2008.

**C.A.R.’s Market Pulse Survey is a monthly online survey sent to more than 10,000 California REALTORS® to measure data about their last closed transaction and sentiment about business activity in their market area for the previous month. Nearly 300 REALTORS® responded.

Leading the way...® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS®(www.car.org) is one of the largest state trade organizations in the United States with more than 190,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

# # #

Share

October Home Sales and Price Report

California home sales tick higher from September, log lower from a year ago

- Existing, single-family home sales totaled 431,020 in October on a seasonally adjusted annualized rate, up 0.8 percent from September and down 3.4 percent from October 2016.

- October’s statewide median home price was $546,430, down 1.6 percent from September and up 6.1 percent from October 2016.

- Condominiums and townhomes recorded higher median price and sales on monthly and annual basis.

LOS ANGELES (Nov. 16) – California home sales lost momentum in October to post the first back-to-back annual sales decline in more than a year as a stubbornly low supply of available homes for sale continued to plague the market, especially at the more affordable price ranges, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.  

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 431,020 units in October, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide sales figure represents what would be the total number of homes sold during 2017 if sales maintained the October pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The October sales figure was up 0.8 percent from the 427,460 level in September and down 3.4 percent compared with home sales in October 2016 of a revised 446,150. Year-to-date sales are running 1.7 percent ahead of last year’s pace, but the annual sales pace has been declining since the first quarter.

“As we enter the fall homebuying season, we’re seeing signs of the market slowing as eroding affordability and persistently low housing inventory cut into home sales,” said 2018 C.A.R. President Steve White. “Moreover, the looming tax reform bill that eliminates important incentives that help first-time homebuyers and existing homeowners will only further adversely impact the housing market."

After reaching its highest level in a decade in August, the statewide median price declined for the second straight month in October but remained above the $500,000 mark for the eighth straight month. The $546,430 October median price dropped 1.6 percent from September’s $555,410 price but climbed 6.1 percent from the revised $515,170 recorded in October 2016. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling, as well as a general change in values.

“While October’s year-to-year price gain was the lowest in five months, we’re still seeing solid price increases, especially in the San Francisco Bay Area. In fact, 20 of the tracked counties recorded strong double-digit, annual price gains,” said C.A.R. Senior Vice President and Chief Economist Leslie-Appleton-Young. “As for home sales, we expect to see year-over-year sales softening in the upcoming months, primarily because of the high sales levels posted in October and November of 2016.”

Other key points from C.A.R.’s October 2017 resale housing report include:

  • All of the major regions reversed September’s sales declines and experienced month-to-month and annual sales increases, with sales in the Inland Empire increasing 5.5 percent from a year ago, the Los Angeles metro region increasing 2.6 percent from October 2016, and sales in the San Francisco Bay Area rising 0.5 percent from last year.
  • In general, home prices across the state continued to grow in October. Forty-seven of the 51 reported counties recorded a year-over-year price increase, with 20 of them growing at double-digit rates.
  • Statewide active listings continued to decline in October, dropping 11.5 percent from a year ago. Since the beginning of the year, active listings have declined by more than 10 percent every month, and the number of available listings for sale has trended downward for more than two years.
  • With housing inventory remaining at stubbornly low levels, the statewide unsold inventory index dropped from 3.4 months in October 2016 to 3.0 months in October 2017. The index measures the number of months needed to sell the supply of homes on the market at the current sales rate. The index stood at 3.2 months in September.
  • At the regional level, the housing shortage in the San Francisco Bay Area and Southern California has been especially pronounced. Every single county in the Southern California region, with the exception of San Bernardino, had a reduction in listings from the previous year; active listings in Los Angeles, Orange, Riverside, and San Diego counties all declined by more than 16 percent compared to last year. Every county in the Bay Area had double-digit declines in active listings compared with last year, with Santa Clara experiencing a near-40 percent drop.
  • With housing inventory remaining tight, the median number of days it took to sell a single-family home in October was 21 days compared with 29 days in October 2016.
  • C.A.R.’s sales price-to-list price ratio* was 98.9 percent statewide in October, 99.1 percent in September, and 98.3 percent in October 2016.
  • The statewide price per square foot reached the highest level since 2007, with the average price per square foot** for an existing, single-family home statewide at $270 in October, up from $252 in October 2016.
  • San Francisco had the highest price per square foot in October at $946/sq. ft., followed by San Mateo ($888/sq. ft.), and Santa Clara ($703/sq. ft.). At the other end of the spectrum, counties with the lowest price per square foot in October included Kern ($133/sq. ft.), Glenn ($134/sq. ft.), and Kings ($137/sq. ft.).
  • Mortgage rates edged higher in October as 30-year, fixed-mortgage interest rates averaged 3.90 percent in October, up from 3.81 percent in September and from 3.47 percent in October 2016, according to Freddie Mac. The five-year, adjustable-rate mortgage interest rate also ticked higher in October to an average of 3.18 percent from 3.16 percent in September and from 2.83 percent in October 2016.

Note:  The County MLS median price and sales data in the tables are generated from a survey of more than 90 associations of REALTORS® throughout the state, and represent statistics of existing single-family detached homes only. County sales data are not adjusted to account for seasonal factors that can influence home sales.  Movements in sales prices should not be interpreted as changes in the cost of a standard home.  The median price is where half sold for more and half sold for less; medians are more typical than average prices, which are skewed by a relatively small share of transactions at either the lower-end or the upper-end. Median prices can be influenced by changes in cost, as well as changes in the characteristics and the size of homes sold.  The change in median prices should not be construed as actual price changes in specific homes.

*Sales-to-list price ratio is an indicator that reflects the negotiation power of home buyers and home sellers under current market conditions. The ratio is calculated by dividing the final sales price of a property by its last list price and is expressed as a percentage.  A sales-to-list ratio with 100 percent or above suggests that the property sold for more than the list price, and a ratio below 100 percent indicates that the price sold below the asking price.

**Price per square foot is a measure commonly used by real estate agents and brokers to determine how much a square foot of space a buyer will pay for a property.  It is calculated as the sale price of the home divided by the number of finished square feet.  C.A.R. currently tracks price-per-square foot statistics for 39 counties.

Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 190,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.


# # #

October 2017 County Sales and Price Activity
(Regional and condo sales data not seasonally adjusted)

October 2017

Median Sold Price of Existing Single-Family Homes

Sales

State/Region/County

Oct.

2017

Sept.

2017

 

Oct.

2016

 

Price MTM% Chg

Price YTY% Chg

Sales MTM% Chg

Sales YTY% Chg

Calif. Single-family home (SAAR)

$546,430

$555,410

 

$515,170

r

-1.6%

6.1%

0.8%

-3.4%

Calif. Condo/Townhomes

$450,840

$450,150

r

$419,820

r

0.2%

7.4%

0.6%

3.3%

Los Angeles Metro Area

$492,340

$504,990

 

$464,110

r

1.0%

8.9%

1.6%

2.6%

Inland Empire

$342,130

$343,260

 

$314,210

r

-0.3%

8.9%

1.4%

5.5%

San Francisco Bay Area

$892,720

$852,230

 

$803,190

r

4.8%

11.1%

3.6%

0.5%

 

 

 

 

 

 

 

 

 

 

San Francisco Bay Area

 

 

 

 

 

 

 

 

 

Alameda

$862,450

$853,000

 

$775,000

 

1.1%

11.3%

22.5%

12.2%

Contra-Costa

$615,000

$605,000

 

$535,650

 

1.7%

14.8%

2.3%

6.1%

Marin

$1,252,500

$1,250,000

 

$1,225,000

 

0.2%

2.2%

-4.0%

-17.1%

Napa

$649,000

$632,500

 

$618,250

 

2.6%

5.0%

-24.5%

-24.5%

San Francisco

$1,594,000

$1,350,000

 

$1,407,500

 

18.1%

13.3%

39.4%

2.7%

San Mateo

$1,522,500

$1,400,500

 

$1,350,000

 

8.7%

12.8%

4.4%

-2.3%

Santa Clara

$1,242,500

$1,180,000

 

$1,047,500

 

5.3%

18.6%

-7.1%

-5.7%

Solano

$415,000

$422,500

 

$392,500

 

-1.8%

5.7%

6.3%

1.2%

Sonoma

$645,000

$620,000

 

$595,000

 

4.0%

8.4%

-13.4%

-7.4%

Southern California

 

 

 

 

 

 

 

 

 

Los Angeles

$580,360

$606,110

r

$536,760

r

-4.2%

8.1%

7.0%

3.1%

Orange

$786,000

$799,000

 

$750,000

 

-1.6%

4.8%

-8.4%

-1.6%

Riverside

$382,500

$385,700

 

$355,950

 

-0.8%

7.5%

1.3%

1.0%

San Bernardino

$274,450

$279,000

 

$245,000

 

-1.6%

12.0%

1.6%

12.5%

San Diego

$603,000

$605,000

 

$576,620

 

-0.3%

4.6%

3.5%

1.9%

Ventura

$635,000

$609,000

 

$599,000

 

4.3%

6.0%

-4.7%

-7.5%

Central Coast

 

 

 

 

 

 

 

 

 

Monterey

$575,000

$569,900

 

$499,900

 

0.9%

15.0%

10.1%

10.1%

San Luis Obispo

$560,000

$607,500

 

$538,500

 

-7.8%

4.0%

-5.8%

12.0%

Santa Barbara

$653,000

$707,000

 

$595,000

 

-7.6%

9.7%

-6.2%

14.7%

Santa Cruz

$867,000

$845,000

 

$799,900

 

2.6%

8.4%

3.4%

34.3%

Central Valley

 

 

 

 

 

 

 

 

 

Fresno

$254,950

$265,000

r

$240,000

r

-3.8%

6.2%

-0.8%

6.4%

Glenn

$215,000

$207,500

 

$185,050

 

3.6%

16.2%

-31.8%

-16.7%

Kern

$229,500

$234,700

 

$227,000

 

-2.2%

1.1%

-1.0%

8.3%

Kings

$213,500

$223,000

 

$217,000

 

-4.3%

-1.6%

1.2%

-1.2%

Madera

$251,980

$269,900

r

$225,000

r

-6.6%

12.0%

-16.9%

-21.6%

Merced

$250,000

$260,000

 

$233,250

 

-3.8%

7.2%

-5.8%

7.4%

Placer

$455,000

$450,000

 

$436,000

 

1.1%

4.4%

1.3%

10.5%

Sacramento

$349,900

$347,750

 

$320,000

 

0.6%

9.3%

-2.7%

-4.3%

San Benito

$545,000

$508,500

 

$506,000

 

7.2%

7.7%

27.5%

8.5%

San Joaquin

$340,000

$355,000

 

$320,000

 

-4.2%

6.3%

-2.9%

3.3%

Stanislaus

$295,000

$295,000

 

$280,000

 

0.0%

5.4%

-3.7%

2.5%

Tulare

$225,000

$229,950

 

$205,000

 

-2.2%

9.8%

-9.2%

17.4%

Other Calif. Counties

 

 

 

 

 

 

 

 

 

Amador

$309,000

$315,000

 

$276,500

 

-1.9%

11.8%

9.3%

5.4%

Butte

$307,700

$311,900

 

$293,000

 

-1.3%

5.0%

7.3%

-15.2%

Calaveras

$298,000

$340,000

 

$300,050

 

-12.4%

-0.7%

7.2%

2.0%

Del Norte

$220,000

$224,300

 

$264,500

 

-1.9%

-16.8%

38.9%

31.6%

El Dorado

$445,000

$449,950

 

$419,000

 

-1.1%

6.2%

-2.5%

6.4%

Humboldt

$305,450

$325,000

 

$305,000

 

-6.0%

0.1%

-2.5%

5.5%

Lake

$257,500

$234,250

 

$262,500

 

9.9%

-1.9%

-18.6%

-10.3%

Lassen

$160,000

$145,500

 

$142,500

 

10.0%

12.3%

-3.6%

68.8%

Mariposa

$275,000

$299,000

 

$267,250

 

-8.0%

2.9%

57.1%

-21.4%

Mendocino

$405,000

$419,000

 

$360,000

 

-3.3%

12.5%

-22.2%

4.3%

Mono

$715,000

$632,500

 

$379,000

 

13.0%

88.7%

-31.8%

66.7%

Nevada

$388,500

$410,000

 

$360,000

 

-5.2%

7.9%

10.3%

6.3%

Plumas

$320,000

$275,000

 

$215,000

 

16.4%

48.8%

14.6%

34.3%

Shasta

$255,000

$244,900

 

$249,000

 

4.1%

2.4%

-0.8%

9.2%

Siskiyou

$217,500

$187,500

 

$182,500

 

16.0%

19.2%

-10.2%

0.0%

Sutter

$285,000

$275,000

 

$250,500

 

3.6%

13.8%

8.3%

8.3%

Tehama

$210,000

$191,750

 

$163,000

 

9.5%

28.8%

34.4%

22.9%

Tuolumne

$266,000

$282,000

 

$221,000

 

-5.7%

20.4%

13.4%

45.3%

Yolo

$445,500

$432,000

 

$381,250

 

3.1%

16.9%

0.0%

15.2%

Yuba

$271,950

$274,900

 

$236,000

 

-1.1%

15.2%

8.9%

8.9%

r = revised
NA = not available

 

October 2017 County Unsold Inventory and Time on Market
(Regional and condo sales data not seasonally adjusted)

October 2017

Unsold Inventory Index

Median Time on Market

State/Region/County

Oct. 2017

Sept. 2017

 

Oct. 2016

 

Oct.

2017

Sept. 2017

 

Oct.

2016

 

Calif. Single-family home

3.0

3.2

 

3.4

r

21.0

20.0

 

29.0

r

Calif. Condo/Townhomes

2.3

2.4

 

2.8

r

16.0

15.0

 

27.0

r

Los Angeles Metro Area

3.3

3.4

 

3.8

r

27.0

24.0

 

42.0

r

Inland Empire

3.6

3.7

 

4.3

 

31.0

27.0

 

44.0

r

San Francisco Bay Area

1.9

2.2

 

2.3

 

20.0

16.0

 

15.0

r

 

 

 

 

 

 

 

 

 

 

r

San Francisco Bay Area

 

 

 

 

 

 

 

 

 

 

Alameda

1.5

2.1

 

1.9

 

13.0

13.0

 

15.0

r

Contra Costa

2.0

2.2

 

2.4

 

15.0

14.0

 

15.0

r

Marin

2.8

3.4

 

2.6

 

29.0

38.0

 

33.0

r

Napa

5.5

4.6

 

4.5

 

61.0

49.5

 

60.0

r

San Francisco

1.6

2.6

 

2.1

 

14.0

15.0

 

16.0

r

San Mateo

1.7

1.9

 

2.1

 

11.0

11.0

 

14.0

r

Santa Clara

1.4

1.4

 

2.0

 

9.0

10.0

 

14.0

r

Solano

2.0

2.4

 

2.7

 

36.0

34.0

 

40.0

r

Sonoma

2.8

3.0

 

2.9

 

39.0

41.0

 

47.0

r

Southern California

 

 

 

 

 

 

 

 

 

 

Los Angeles

2.9

3.1

 

3.5

 

21.0

19.0

 

34.0

r

Orange

3.1

3.1

 

3.6

 

28.0

26.0

 

48.0

r

Riverside

3.7

3.7

 

4.5

 

29.0

26.0

 

46.0

r

San Bernardino

3.5

3.6

 

4.0

 

34.0

27.0

 

41.0

r

San Diego

2.7

3.0

 

3.3

 

19.0

16.0

 

19.0

r

Ventura

4.6

4.7

 

4.5

 

51.0

50.0

 

58.0

r

Central Coast

 

 

 

 

 

 

 

 

 

 

Monterey

4.1

4.7

 

4.9

 

25.0

27.0

 

36.0

r

San Luis Obispo

4.0

3.9

 

4.8

 

30.5

32.0

 

34.0

r

Santa Barbara

4.2

4.1

 

5.1

 

26.0

31.0

 

29.0

r

Santa Cruz

2.9

3.4

 

3.8

 

19.0

18.0

 

33.0

r

Central Valley

 

 

 

 

 

 

 

 

 

 

Fresno

3.0

3.1

 

3.7

 

16.0

12.0

 

18.0

r

Glenn

5.5

3.5

 

5.0

 

47.0

30.5

 

40.5

r

Kern

3.4

3.5

 

4.1

 

26.0

22.0

 

31.0

r

Kings

3.4

3.3

 

3.4

 

24.5

23.0

 

17.0

r

Madera

4.9

5.5

 

4.5

 

23.0

22.0

 

35.5

r

Merced

3.2

2.8

 

3.0

 

19.0

14.0

 

36.0

r

Placer

2.5

2.8

 

2.9

 

20.0

17.0

 

20.0

r

Sacramento

2.5

2.6

 

2.4

 

13.0

13.0

 

15.0

r

San Benito

3.5

4.5

 

3.8

 

36.0

13.0

 

25.0

r

San Joaquin

2.6

2.6

 

2.9

 

17.0

16.0

 

22.0

r

Stanislaus

2.6

2.6

 

3.2

 

15.0

18.0

 

18.0

r

Tulare

4.3

3.7

 

4.3

 

21.5

20.0

 

21.0

r

Other Calif. Counties

 

 

 

 

 

 

 

 

 

 

Amador

4.2

4.9

 

4.3

 

38.0

46.0

 

48.5

r

Butte

2.9

3.4

 

2.9

 

24.0

15.0

 

27.0

r

Calaveras

5.3

6.2

 

5.0

 

58.5

41.0

 

55.5

r

Del Norte

6.2

9.2

 

8.1

 

115.0

71.0

 

134.0

r

El Dorado

3.5

3.9

 

3.5

 

48.0

41.0

 

40.0

r

Humboldt

4.7

4.7

 

3.4

 

24.0

34.0

 

34.0

r

Lake

6.3

5.4

 

5.4

 

36.5

47.0

 

69.5

r

Lassen

6.4

6.8

 

0.0

 

93.0

89.5

 

98.0

r

Mariposa

5.4

9.3

 

6.0

 

71.0

45.0

 

91.0

r

Mendocino

6.4

5.4

 

7.1

 

55.0

53.0

 

73.0

r

Mono

5.5

4.5

 

14.0

 

125.0

88.0

 

112.0

r

Nevada

4.0

4.7

 

3.9

 

30.0

40.0

 

34.0

r

Plumas

6.6

9.0

 

9.5

 

117.0

114.0

 

140.0

r

Shasta

4.2

4.2

 

4.4

 

33.0

27.0

 

42.0

r

Siskiyou

6.5

6.5

 

6.1

 

31.0

45.0

 

42.5

r

Sutter

2.9

3.1

 

2.3

 

24.0

19.5

 

22.0

r

Tehama

5.2

7.6

 

6.7

 

91.0

55.0

 

69.0

r

Tuolumne

3.8

5.0

 

6.6

 

63.5

42.0

 

63.0

r

Yolo

2.0

2.3

 

3.0

 

20.0

17.5

 

18.5

r

Yuba

2.8

3.0

 

2.5

 

22.0

14.0

 

19.0

r

r = revised
NA = not available

Share

Calculated Risk: Are house prices a new bubble?

Calculated Risk: Are house prices a new bubble?

On Friday, I posted five economic questions I'm frequently asked. I'll post some thoughts on each of these topics over the next couple of weeks.

A common question is: Are house prices in a new bubble?  My short answer was: No.  Here is an explanation.

First, we need to define a bubble. Way back in April 2005, when I was very bearish on housing, I wrote: Housing: Speculation is the Key. From that post:

I have taken to calling the housing market a "bubble". But how do I define a bubble?

A bubble requires both overvaluation based on fundamentals and speculation. It is natural to focus on an asset’s fundamental value, but the real key for detecting a bubble is speculation - the topic of this post. Speculation tends to chase appreciating assets, and then speculation begets more speculation, until finally, for some reason that will become obvious to all in hindsight, the "bubble" bursts.

First, on valuation: two key measures are house prices to income, and real house prices. The Census Bureau released the Income, Poverty and Health Insurance Coverage in the United States: 2016 in September. The report showed a significant increase in the real median household income: 

The U.S. Census Bureau announced today that real median household income increased by 3.2 percent between 2015 and 2016 ... Median household income in the United States in 2016 was $59,039, an increase in real terms of 3.2 percent from the 2015 median income of $57,230. This is the second consecutive annual increase in median household income.

The firs two graphs use annual averages of the Case-Shiller house price index - and the nominal median household income (and the mean for the fourth fifth income) through 2016.

image: https://2.bp.blogspot.com/-CxAYOEkHwSs/WbgZo0mKLBI/AAAAAAAAsPQ/mEz503CNvycyJCL1SgPAv7eBcEzEKMsoACLcBGAs/s320/HPIMedian2016.PNG

House Prices and Median Household IncomeClick on graph for larger image.

This graph shows the ratio of house price indexes divided by the Median Household Income through 2016 (the HPI is first multiplied by 1000).

This uses the annual average National Case-Shiller index since 1976.

As of 2016, house prices were above the median historical ratio - but far below the bubble peak. 

The second graph is similar but uses the mean of the fourth fifth household income (if we separate households into fifths, this is the second highest income group). 

image: https://3.bp.blogspot.com/-P9ZiTOgzoxg/WbgZrPUQPtI/AAAAAAAAsPU/RHFyt0CoUIgIuotQ2uzaBOFct54cGHfKACLcBGAs/s320/HPI4th5th2016.PNG

House Prices and WagesThese are key households since they are more likely to be homeowners (and home buyers).

Using this group, prices are well below the bubble peak.

By these measures, we could argue house prices are 15% to 20% too high, but this is a relatively small overvaluation compared to the 50%+ overpricing at the peak of the housing bubble.

image: https://3.bp.blogspot.com/-O3iVWryO2og/WcqgonK5CvI/AAAAAAAAsYY/mT80bR_mxMkH21iYWgoMsbeZoKwJgaUHwCLcBGAs/s320/RealJuly2017.PNG

Real House PricesThe third graph shows the monthly Case-Shiller National index SA, and the monthly Case-Shiller Composite 20 index SA (through July) in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.

At first glance, this seems to suggest prices are 30% too high (and were maybe 50% to 60% too high during the bubble).  However there is an upward slope to real prices, see The upward slope of Real House Pricesand Lawler: On the upward trend in Real House Prices.

After adjusting for the historical upward slope in real prices, I'd estimate prices are about 15% too high.

On Speculation: Back in 2005, it was easy to identify excess speculation.  There is currently some flipping activity, but this is more the normal type of flipping (buy, improve and then sell).  Back in 2005, people were just buying homes are letting them sit vacant - and then selling without significant improvements.  Classic speculation. 

And even more dangerous during the bubble was the excessive use of leverage (all those poor quality loans).  Currently lending standards are decent, and loan quality is excellent.

So prices may be a little overvalued, but there is little speculation - and I wouldn't call house prices a bubble - and I don't expect house prices to decline nationally like during the bust.
Read more at http://www.calculatedriskblog.com/2017/10/are-house-prices-new-bubble.html#15qs9SuKs1DZB1If.99

Share

FSBOs Hit Record Low For Third Straight Year

FSBOs Hit Record Low For Third Straight Year

For the third year in a row, for-sale-by-owner (FSBO) transactions accounted for only 8 percent of recent home sales, the lowest share that the National Association of Realtors (NAR) has recorded in its annual Profile of Home Buyers and Sellers since the report was first released in 1981.

FSBO sales hovered between 12 percent and 14 percent from 2001 to 2008. In addition, the share of recent homesellers who sold with an agent remained at a record high of 89 percent in the last year.

NAR Managing Director of Survey Research Jessica Lautz says FSBO sales have flattened due to current market conditions where sellers need a competitive edge that only an agent can provide.

“What we do see is that sellers are working with agents to help market their homes to potential buyers, sell it in a specific time frame and price the home competitively,” she said. “Pricing the home competitively is really important for sellers today, especially because everything is rapidly changing with prices.”

“So knowing how to price that home so they can sell quickly is important, and that’s difficult for FSBOs to do,” she added.

Share

Survey: Buyers Leery of Online Mortgage Info

Survey: Buyers Leery of Online Mortgage Info | Realtor Magazine

Consumers trust real estate professionals and lenders more than online sources or family and friends when it comes to obtaining information about mortgages, according to a new Fannie Mae survey based on 1,000 responses. Recent home buyers surveyed, including younger age groups, say they consulted multiple sources of information about the mortgage process but found lenders and real estate agents to be more credible than mobile apps, websites, and social media.

Though survey respondents say online sources are more convenient, they indicated a higher level of confidence in getting information through person-to-person interaction. However, home buyers do report using online sources to shop for a home much more often than to shop for a mortgage, according to the survey.

 

Share

Housing woes spur Bay Area residents to ponder exodus

Housing woes spur Bay Area residents to ponder exodus: poll

The new Berkeley Institute of Governmental Studies Poll determined that 65 percent of the Bay Area’s registered voters and 48 percent of voters in California describe the issue of housing affordability as an “extremely serious” problem.

“Housing is a huge problem in the Bay Area — that is 200 percent true,” said Bob Barksdale, a Lafayette resident who owns a home and has to battle constant traffic jams in the East Bay because skyrocketing home prices have forced so many people into lengthy, challenging commutes.

The poll also found that 51 percent of Bay Area residents have considered moving out of the nine-county region, compared with 56 percent statewide who have considered relocating.

“These are very dramatic findings,” said Mark DiCamillo, director of the Berkeley IGS Poll. “In every region of California, the rising cost of housing has crept into the consciousness of voters.”

Share

August home sales and price report

August home sales and price report

California housing market defies tight inventory as sales and median price propel higher

- Existing, single-family home sales totaled 427,630 in August on a seasonally adjusted annualized rate, up 1.5 percent from July and 1.3 percent from August 2016.
- August’s statewide median home price was $565,330, up 2.9 percent from July and 7.2 percent from August 2016. 
- At the regional level, the San Francisco Bay Area, Inland Empire, and Los Angeles metro area all registered year-to-year sales increases of 6.5 percent, 8.2 percent, and 4.4 percent, respectively.

LOS ANGELES (Sept. 18) – California’s housing market defied gravity as existing home sales and median home price registered increases on both a monthly and an annual basis in August, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. 

Closed escrow sales of existing, single-family detached homes in California remained above the 400,000 benchmark for the 17th consecutive month and totaled a seasonally adjusted annualized rate of 427,630 units in August, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide sales figure represents what would be the total number of homes sold during 2017 if sales maintained the August pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The August sales figure was up 1.5 percent from the 421,460 level in July and up 1.3 percent compared with home sales in August 2016 of a revised 422,190. Year-to-date sales are running 2.7 percent ahead of last year’s pace, but have curtailed since the first quarter.

“While August’s strong housing market performance is encouraging, it’s really a tale of two markets. Despite sales growth across all segments of the market, lower-priced homes are particularly inventory constrained, which leads to weaker sales growth, faster rising prices, and fierce competition for the few homes that are listed,” said C.A.R. President Geoff McIntosh. “These homes are selling faster than historically and for top dollar, adversely impacting entry-level buyers who are already struggling to afford to buy their very first home."

The statewide median price reached its highest level in a decade and remained above the $500,000 mark for the sixth straight month. The median price rose 2.9 percent from $549,460 in July to $565,330 in August and climbed 7.2 percent from the revised $527,490 recorded in August 2016. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling, as well as a general change in values.

“A shortage of available homes for sale continues to stoke robust growth in home prices,” said C.A.R. Senior Vice President and Chief Economist Leslie-Appleton-Young. “August marked the third straight month that the median price gained 7 percent or more year-over-year, indicating that prices are not only growing, but are accelerating into the end of the year. For the most inventory constrained segment of the market – the bottom 20 percentile – home prices rose even higher with a double-digit gain (10.7 percent).”

Other key points from C.A.R.’s August 2017 resale housing report include:

• All of the major regions experienced robust month-to-month and annual gains, with Inland Empire jumping 8.2 percent from a year ago, the San Francisco Bay Area rising 6.5 percent, and the Los Angeles metro region increasing 4.4 percent from August 2016.
• San Francisco overtook San Mateo as the most expensive market in the state.
• With consistent home price growth, even the most affordable markets are facing rising prices. California is no longer home to a single county with a median price below $200,000, and only 10 of 58 counties have a median price lower or equal to the national median price of $258,300.
• Statewide active listings continued to decline, dropping 11.9 percent from a year ago.
• With strong sales growth and little new inventory to replenish the housing supply, C.A.R.’s Unsold Inventory Index fell from 3.2 months in July to 2.9 months in August. The index measures the number of months needed to sell the supply of homes on the market at the current sales rate. The index stood at 3.4 months in August 2016.
• Housing supply remained tight throughout the state as every single county in both the San Francisco Bay Area and Southern California saw a reduction in unsold inventory, as did most parts of the Central Coast and Central Valley.
• The median number of days it took to sell a single-family home was 18 days compared with 16 days in July and 28 days in August 2016. 
• C.A.R.’s sales price-to-list price ratio* was 99.5 percent statewide in August, 100 percent in July, and 98.9 percent in August 2016. At the county level, San Francisco had the highest ratio at 114.8 percent and Mono had the lowest at 93.8 percent.
• The average price per square foot** for an existing, single-family home statewide was $268 in August, $270 in July, and $250 in August 2016.
• San Francisco had the highest price per square foot in August at $871/sq. ft., followed by San Mateo ($863/sq. ft.), and Santa Clara ($668/sq. ft.). Counties with the lowest price per square foot in August included Siskiyou and Lassen (both at $129/sq. ft.), Kern ($135/sq. ft.), and Tulare ($136/sq. ft.).
• Mortgage rates declined further in August as the 30-year, fixed-mortgage interest rate averaged 3.88 percent in August, down from 3.97 percent in July but was up from 3.44 percent in August 2016, according to Freddie Mac. The five-year, adjustable-rate mortgage interest rates ticked down in August to an average of 3.15 percent from 3.22 percent in July but was up from 2.74 percent in August 2016.

Graphics (click links to open):
• Calif. historical existing home sales.
• Calif. historical median home price.
• Sales performance by price range.
• Calif. price per square foot.
• Calif. sales to list price ratio.

Note:  The County MLS median price and sales data in the tables are generated from a survey of more than 90 associations of REALTORS® throughout the state, and represent statistics of existing single-family detached homes only. County sales data are not adjusted to account for seasonal factors that can influence home sales.  Movements in sales prices should not be interpreted as changes in the cost of a standard home.  The median price is where half sold for more and half sold for less; medians are more typical than average prices, which are skewed by a relatively small share of transactions at either the lower-end or the upper-end. Median prices can be influenced by changes in cost, as well as changes in the characteristics and the size of homes sold.  The change in median prices should not be construed as actual price changes in specific homes.

*Sales-to-list price ratio is an indicator that reflects the negotiation power of home buyers and home sellers under current market conditions. The ratio is calculated by dividing the final sales price of a property by its last list price and is expressed as a percentage.  A sales-to-list ratio with 100 percent or above suggests that the property sold for more than the list price, and a ratio below 100 percent indicates that the price sold below the asking price.
**Price per square foot is a measure commonly used by real estate agents and brokers to determine how much a square foot of space a buyer will pay for a property.  It is calculated as the sale price of the home divided by the number of finished square feet.  C.A.R. currently tracks price-per-square foot statistics for 39 counties.

Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 190,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

# # #

August 2017 County Sales and Price Activity
(Regional and condo sales data not seasonally adjusted)

August-17 Median Sold Price of Existing Single-Family Homes Sales
State/Region/County Aug-17 Jul-17   Aug-16   Price MTM% Chg Price YTY% Chg  Sales MTM% Chg  Sales YTY% Chg
CA Single-family (SAAR) $565,330 $549,460 R $527,490 R 2.9% 7.2% 1.5% 1.3%
CA Condo/Townhomes $446,760 $443,160   $419,260 R 0.8% 6.6% 9.7% 1.8%
Los Angeles Metro Area $499,970 $508,810 R $473,300 R -1.7% 5.6% 11.5% 4.4%
Inland Empire $341,340 $344,040 R $316,630 R -0.8% 7.8% 10.8% 8.2%
San Francisco Bay Area $856,200 $898,880   $777,160   -4.7% 10.2% 9.4% 6.5%
                   
San Francisco Bay Area                  
Alameda $867,500 $875,500   $775,000   -0.9% 11.9% 12.9% 6.4%
Contra-Costa  $627,860 $633,250   $570,000   -0.9% 10.2% 16.6% 11.0%
Marin $1,207,120 $1,224,000   $1,200,000   -1.4% 0.6% -15.7% 9.6%
Napa $654,000 $695,000   $625,000   -5.9% 4.6% 5.0% -4.5%
San Francisco $1,380,000 $1,428,000   $1,257,500   -3.4% 9.7% 1.0% 9.7%
San Mateo $1,375,000 $1,500,000   $1,250,000   -8.3% 10.0% 6.1% -7.7%
Santa Clara $1,150,000 $1,165,000   $975,000   -1.3% 17.9% -2.0% 11.9%
Solano $410,000 $420,000   $410,000   -2.4% 0.0% 21.9% -2.5%
Sonoma $625,500 $645,000   $585,000   -3.0% 6.9% 24.2% 8.8%
Southern California                  
Los Angeles $575,130 $573,190 R $524,420 R 0.3% 9.7% 14.8% 3.4%
Orange  $789,000 $785,000   $749,000   0.5% 5.3% 6.1% 0.5%
Riverside  $388,500 $385,500   $355,000   0.8% 9.4% 6.3% 3.3%
San Bernardino $269,950 $266,250   $240,500 R 1.4% 12.2% 18.0% 16.1%
San Diego $605,000 $613,000   $563,000   -1.3% 7.5% 11.0% 4.9%
Ventura $640,000 $648,500 R $609,000 R -1.3% 5.1% 11.4% -0.2%
Central Coast                  
Monterey $580,500 $629,000   $515,000   -7.7% 12.7% 20.0% 9.6%
San Luis Obispo $599,000 $590,000   $535,000   1.5% 12.0% 12.5% 6.1%
Santa Barbara $631,000 $611,000   $775,000   3.3% -18.6% 24.0% 21.9%
Santa Cruz $825,000 $815,000   $824,000   1.2% 0.1% 24.8% -11.6%
Central Valley                  
Fresno $259,000 $258,000   $239,000   0.4% 8.4% 12.5% 13.8%
Glenn $225,000 $205,000   $230,500   9.8% -2.4% -4.8% 42.9%
Kern $235,100 $235,000   $220,000   0.0% 6.9% 4.3% -0.7%
Kings $225,000 $222,000   $209,220   1.4% 7.5% 5.7% 18.1%
Madera $263,500 $279,250   $245,000   -5.6% 7.6% -26.1% -28.6%
Merced $250,000 $260,000   $220,000   -3.8% 13.6% 22.9% 19.3%
Placer $462,000 $453,000   $430,000   2.0% 7.4% 16.3% 12.8%
Sacramento $348,000 $353,000   $323,500   -1.4% 7.6% 5.0% -4.2%
San Benito $600,000 $535,000   $538,380   12.1% 11.4% 28.8% 34.0%
San Joaquin $355,000 $350,000   $325,000   1.4% 9.2% 21.1% 12.0%
Stanislaus $294,290 $297,000   $272,750   -0.9% 7.9% 12.3% 7.8%
Tulare $224,900 $219,950   $204,900   2.3% 9.8% 6.4% 3.6%
Other Counties in California                  
Amador $334,500 $320,000   $257,500   4.5% 29.9% -9.4% 4.3%
Butte  $291,000 $299,900   $264,120   -3.0% 10.2% 4.6% 1.0%
Calaveras $345,000 $324,500   $310,000   6.3% 11.3% 40.0% 8.6%
Del Norte $214,950 $204,900   $174,500   4.9% 23.2% 36.8% 44.4%
El Dorado  $485,000 $480,500   $425,000   0.9% 14.1% 29.2% 9.2%
Humboldt $316,750 $307,500   $290,000   3.0% 9.2% 2.6% -11.1%
Lake $241,500 $265,000   $234,500   -8.9% 3.0% 29.7% -7.7%
Lassen $215,000 $171,000   $185,000   25.7% 16.2% 0.0% -13.8%
Mariposa $280,000 $262,500   $311,500   6.7% -10.1% 45.5% -20.0%
Mendocino $402,500 $370,000   $362,500   8.8% 11.0% -5.3% -15.6%
Mono $386,500 $578,000   $532,500   -33.1% -27.4% -36.8% -50.0%
Nevada $375,000 $398,500   $343,000   -5.9% 9.3% 2.4% -13.4%
Plumas $325,000 $325,000   $275,000   0.0% 18.2% 45.7% 21.4%
Shasta $252,450 $255,000   $248,000   -1.0% 1.8% 12.2% 10.9%
Siskiyou  $212,000 $215,000   $204,500   -1.4% 3.7% 7.0% -11.5%
Sutter $289,000 $280,300   $267,410   3.1% 8.1% 38.6% 18.3%
Tehama $225,000 $206,750   $202,000   8.8% 11.4% 28.1% -19.6%
Tuolumne $292,000 $292,500   $266,450   -0.2% 9.6% 47.8% 18.6%
Yolo $445,000 $426,750   $410,480   4.3% 8.4% 17.6% -9.4%
Yuba $265,000 $266,890   $249,900   -0.7% 6.0% -3.6% -16.5%

r = revised
NA = not available

 

August 2017 Unsold Inventory and Time on Market
(Regional and condo sales data not seasonally adjusted)

August-17 Unsold Inventory Index Median Time on Market
State/Region/County Aug-17 Jul-17   Aug-16   Aug-17 Jul-17   Aug-16  
CA SFH (SAAR) 2.9 3.2   3.4   18.0 16.0 r 28.0 r
CA Condo/Townhomes 2.2 2.4   2.7 r 14.0 14.0 r 29.0 r
Los Angeles Metro Area 3.1 3.6   3.7   22.0 20.0 r 44.0 r
Inland Empire 3.3 3.7   4.1   25.0 23.5 r 45.0 r
S.F. Bay Area 1.9 2.1   2.5 R 15.0 14.0 r 20.0 r
                    r
S.F. Bay Area                    
Alameda 1.6 1.8   2.1   13.0 13.0 r 14.0 r
Contra Costa 1.9 2.2   2.4   13.0 12.0 r 13.0 r
Marin 3.0 2.3   3.6   39.0 31.0 r 39.0 r
Napa 4.6 4.7   4.8   49.5 45.0 r 41.0 r
San Francisco 1.7 1.4   2.2   15.0 15.0 r