Greater Los Angeles saw a dramatic -35.9% year-on-year decline in sales of existing single-family homes in July. Home sales and prices fell across the state of California, and few buyers feel positive about their purchasing power in the next 12 months. The CAR consumer sentiment survey revealed that only 8% of homebuyers plan to buy in the next 12 months. As experts predict the Fed will raise interest rates, mortgage rates will rise in September, resulting in lower affordability for buyers.
The momentum of market forces, combined with continued low affordability, caused home sales to fall across the Golden State in July. Home prices fell more sharply last month, even though wages and jobs were strong and home inventory increased 54.9% year-on-year. Statewide supply increased from 1.9 months to 3.2 months in July. CAR says this is due to a decline in demand.
Days to sell increased to 14 days from 8 days last year. The combination of the risk of falling housing market, rising interest rates and inflation are causing more California homeowners to consider selling their properties. However, their intention to sell is diminished by the desire to obtain a comfortable price, the need to make extreme relocation decisions, and the signing of a new, more expensive mortgage. Shoppers also continue to move away from offers at a faster pace. With rental prices remaining strong, it shows that buyers are committing more fully to the rental market, and perhaps waiting for the economy to resolve itself.
As layoffs in the corporate sector grow in the face of rapidly rising mortgage rates, the July housing market crash could accelerate further in September and October. President Otto Catrina said: “Amid the peak homebuying season, high home prices and rising interest rates depressed housing affordability to its lowest level in nearly 15 years, which in turn slowed home sales.” C, A, R Vice President and Chief Economist Jordan Levine believes that the pace of falling sales is expected to slow in the coming months and that market volatility could slow down. Sales in all regions declined dramatically year after year, with the largest declines in the San Francisco Bay Area (-20.4%), the Los Angeles metropolitan area (-2.19%) and Southern California (-21.8%). Napa, Los Angeles, San Bernardino, San Diego and Santa Barbara saw the biggest declines month by month. Year-over-year declines were extreme in Santa Clara, Contra Cost, Alameda, Orange, San Bernardino, Los Angeles and San Diego. Recently, CAR reported a record number of homes viewed per buyer now at 8, and 3 of them are viewed online - two years ago homebuyers saw 12 homes on average. Mortgages did see a reduction in growth rate; however with more Fed rate hikes expected enthusiasm and qualification for mortgage loans for more buyers should decrease. In the San Francisco Bay Area prices fell 7%, probably due to the decline in the technology sector. Bay Area prices fell 1.8%, while sales 4.4% vs last month and sales fell 27.1% year-on-year. California is blamed for rapidly rising house prices in other states such as Utah and Idaho.
An exodus of people and companies may sound threatening but it may be that the housing market in this state is invincible - people want to live or rent here. If high taxes, regulations, fires, floods and high prices can't scare buyers away what could? Below we have several infographics courtesy of December CAR sales report that say everything about the state and direction of California's housing market. Home Inventories return to pre-pandemic levels - screenshot courtesy of California Association of Realtors - it took another day to sell a house an average of 11 days out of 10 last month - active listings reached their highest levels since before pandemic. Active Home Listings Increase in California - inflation reached 8.5% in July but food rent and other prices increased - if energy prices rise this fall it is easy to predict strong Fed rate hikes to slow them down so they can meet their 2% inflation rate targets. Sales growth normally recedes in fall months but this fall season decline could be much steeper - pending sales have been falling even in luxury housing market - pending condo and townhome sales have continued to fall. California real estate is always a hot topic - learn more about investing in rental properties is smart and how property management software is providing foundation for profitable rental portfolios. Read more about San Francisco Market San Diego Market and Los Angeles Market - according CAR only about 25% think it's good time to buy home no change from last year - certainly vaccines will free up many older California residents perhaps sell their homes at record prices. However homeowners can be very cautious about giving up valuable properties when moving is difficult and expensive and homes are very difficult to find - without certain places to go ads don't grow as expected - it absolutely largest sales market history California - perhaps more so destination cities pandemic within state. Main challenge California's housing market now coming end pandemic stimulus payments homeowners renters small businesses - end eviction moratorium could launch large number homes market homeowners can't meet mortgage obligations - state's unemployment rate improved 7.9% May but remains one highest unemployment rates nation. CAR Forecast Report Shows Reasons People Are Moving Buying - see some information below - sales especially condo prices NAPA have skyrocketed (condo prices see below skyrocketed nearly....
