California home sales slowed way down in March
What is going on in the Golden State?
Single-family and condominium March 2016 sales were down in California by 4.7% from last March, according to the PropertyRadar Real Property Report, March 2016.
Although the property sales increased from February, from 24,886 sales to 33,365 sales, this 34.1% increase is typical as March is the start of the home-buying season, according to the report. In addition to being the second slowest March since 2008, 2016’s first quarter sales decreased by 1.2% from the first quarter of 2015, also the second lowest first quarter sales since 2008.
“March marks the start of the selling season and sales this past month were the second lowest March since 2008,” said Madeline Schnapp, PropertyRadar director of economic research. “The lack of inventory and terrible affordability are a drag on sales. Without new inventory, sales will likely remain flat for the foreseeable future.”
The California Association of Realtors predicted that although increasing home prices would hinder growth in 2016, the market would still improve.
In November 2015, which had the lowest November sales since 2007, TRID regulations were credited with the decrease. Schnapp said the regulations would not affect the market for long, and expected to see increases into 2016.
“The TRID effect will likely impact the real estate market for another month or so,” Schnapp said. “In the meantime, artificially depressed sales and higher median prices may be with us through January 2016.”
Median home prices rose again in March to $415,000, up 6.4% from February’s $390,000. Median home prices are up 5.6% from March 2015.
CAR predicted median home prices would increase by 3.2% for the entire year of 2016 to $491,300.
“The increase in the median price from February 2016 to March 2016 is a great example of the influence of the shift in mix of homes sold rather than the price of a house actually increasing,” Schnapp said. “In February, there were more lower priced homes sold than higher priced homes. Conversely, the mix shifted in March when more higher priced homes sold pushing the median price higher.”
From the 26 largest counties in California, the highest annual price appreciation was in Santa Cruz at 14.5%, follows by Santa Clara at 12.6%, Marin at 11.5%, Contra Costa at 9.5% and Los Angeles at 9.1%.
“Affordability and lack of inventory is a challenge in every part of the state with a decent job market,” Schnapp said. “The closer you are to the coast, the worse it gets. As prices march steadily higher, they eventually hit a level where you run out of buyers willing to pay those prices.”