Median Price Hits 9-Year High, Up 6.3 Percent from June 2015

Real Property Report – California, June 2016

California single-family home and condominium sales were 41,291 in June 2016, up 8.1 percent from a revised 38,198 in May 2016. On a year-ago basis, sales were down 4.5 percent from 43,227 in June 2015.

Year-to-date sales (January through June 2016) totaled 199,310 properties, down 2.8 percent from the same time period in 2015. January through June sales have oscillated around the 200,000 mark since 2009.

“Sales have trended mostly sideways for eight consecutive years,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “While sales volumes appear to have hit a ceiling, prices continue to reach new heights. Lack of inventory, near record low mortgage interest rates, and increase in demand due to California’s continued economic vitality are pushing prices higher.”

The June 2016 median price of a California home was $441,250, a 9-year high and an increase of 1.4 percent, from a revised $435,000 in May. On a year-ago basis, median home prices were up 6.3 percent from $415,000. The median price of a condominium was $415,000, up 1.2 percent from $410,000 in May 2016 and up 3.8 percent from $400,000 in June 2015.

At the county level, median home prices in 18 of California’s 26 largest counties reached 9-year highs. The median home price in San Mateo County reached $1,267,000, the highest in our records dating back to 2001.

“The increase in home prices is not surprising given the fact that new housing inventory is difficult to deliver within California’s burdensome regulatory environment,” said Schnapp. “While inventory remains constrained, California’s economic growth engine continues to churn out an impressive number of new jobs, 448,000 in 2015, driving up demand. That, combined with investors buying real estate to shelter cash, continues to push up prices beyond reasonable levels.”

Cash sales of single-family homes and condominiums in June 2016 were 19.7 percent of total sales. Cash sales were up 1.6 percent for the month but down 7.8 percent from June 2015.

Within the 26 largest counties in California, the counties with the highest percentage of cash sales were Sonoma (27.2 percent), Monterey (24.9 percent), San Francisco (24.3 percent), Santa Cruz (23.5 percent) and San Luis Obispo (23.3 percent). “Cash sales remain elevated despite high prices,” said Schnapp.

“As investment alternatives returning positive yield become few and far between, and record amounts of cash is now sitting on the sidelines searching for safety, some of that cash is clearly finding its way into the real estate markets.”

In other California housing news:

Flip Sales. Flip sales in June 2016 were up 1.9 percent for the month but were down 8.0 percent over the past 12 months. Flip sales accounted for 2.9% of total sales, the lowest since May 2011.
Negative Equity. The number of homeowners in a negative equity position fell this past month to 518,000, or 5.9 percent of homeowners. Currently, one in 16 homeowners are underwater, down from one in eight 24 months ago.
Trustee Sale Purchases by LLC and LPs fell 2.0 percent for the month but were up 11.6 percent from a year ago. Trustee sale purchases have been trending mostly sideways since November 2013.
Institutional Investor Sales by LLC and LPs fell 4.8 percent from May 2016 and were down 1.8 percent from June 2015. Despite the recent pull-back, investor purchases have trended mostly sideways since 2014.
Institutional Investor Sales by LLC and LPs fell 0.8 percent for the month and were down 13.8 percent from June 2015. When the seasonal fluctuations are removed, investor sales have been on a gradual downward trend since reaching an interim peak in December 2012.
Foreclosure Notices. Notices of Default (NODs) were up 2.9 percent from May 2016 but down 4.8 percent in the past 12 months and are at their lowest levels in our records dating back to January 2007. Notices of Trustee Sale (NTS) gained 8.7 percent for the month and were up 6.7 from June 2015.
Foreclosure Sales gained 13.7 percent for the month but are down 11.5 percent from June 2015. Despite last month’s increase, foreclosure sales remain near their lowest levels in our records.