January home sales drop, price adjustments indicate rebalancing of California market

Economic and market uncertainties sent January home sales down
to their lowest level since April 2008, according to the latest
California Association of Realtors sales and price report. Sales
in January dropped double-digits on a year-over-year basis in the
Los Angeles Metro Area, Central Coast, Central Valley and Inland
Empire regions, while home sales in the San Francisco Bay Area fell
5.8 percent from a year ago.

Closed escrow sales of existing, single-family detached homes in
the state totaled 357,730 units in January, down 3.9 percent from
the revised 372,260 level in December and down 12.6 percent from
home sales in January 2018 of 409,520.

“California continued to move toward a more balanced market as
we see buyers having greater negotiating power and sellers making
concessions to get their homes sold as inventory grows,” said
C.A.R. President Jared Martin. “While interest rates have
dropped down to the lowest point in 10 months, potential buyers are
putting their homeownership plans on hold as they wait out further
price adjustments.”

The statewide median home price declined to $538,690 in January,
down 3.4 percent from $557,600 in December and up 2.1 percent from
a revised $527,780 in January 2018.

Forty of the 51 counties reported by C.A.R. posted a sales
decline in January with an average year-over-year sales decline of
nearly 19 percent. Twenty-eight counties declined by double-digits
on an annual basis, and 10 counties experienced an increase in
sales from a year ago.

After experiencing its worst annual sales drop in more than
eight years in December of 17.5 percent, sales in the San Francisco
Bay Area bounced back with a more moderate decline of 5.8 percent
in January. The median home price continued to increase in all
regions, though at a slower pace. On a year-over-year basis, the
Bay Area median price rose 4.5 percent from January 2018. Home
prices in Marin, San Francisco, San Mateo and Santa Clara counties
continued to remain above $1 million, but Marin County recorded a
12.8 percent annual price decline.

“Real estate is cyclical and what we are experiencing here is
a rebalancing of the market. Home prices were rising very quickly
and too steeply. Many qualified buyers had become frustrated after
repeatedly losing out to multiple offers on their dream home,”
said Alan Barbic, president of the Silicon Valley Association of
Realtors.

Home sales in six of the nine Bay Area counties fell from a year
ago, and in Napa, Contra Costa and Solano counties, sales declined
by more than 10 percent. Santa Clara Country home sales dropped 5.4
percent from January 2018 and were down 23.3 percent from December
2018.

The January 2019 median home price for a single-family home in
Santa Clara County was $1,185,000, down 1.3 percent from the
January 2018 median of $1,170,000 and down 3 percent from the
December 2018 median of $1,150,000.

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C.A.R. reports Santa Clara County’s Unsold Inventory Index, which
is a ratio of inventory over sales, was at 3 months, up from 1.9 in
January 2018 and 1.8 months in December 2018. The benchmark for a
healthy market is six months supply of inventory.

“Moderating home prices and lower interest rates will improve
housing affordability and should bring more buyers back to the
market as we head into spring,” said Barbic.

According to Freddie Mac, the 30-year fixed mortgage averaged
4.35 percent for the week ending Feb. 21, down from 4.37 percent
the previous week. The 30-year, fixed-mortgage interest rate
averaged 4.46 percent in January, up from 4.03 percent in January
2018.

Source: FS – All – Real Estate News 1
January home sales drop, price adjustments indicate rebalancing of California market