Blog

The California Association of Realtors (C.A.R.) reports October home sales increased 1 percent; median home price declined 3.2

Quick Facts: Existing, single-family home sales increased 1 percent in October to a seasonally adjusted rate of 562,400 units on an annualized basis.

The statewide median price of an existing single-family home increased 0.3 percent in October to$297,500, compared with September 2009.

C.A.R.’s Unsold Inventory Index fell to 4 months in October, compared with 6.1 months in October 2008.

"Home sales historically trail off during the fall and winter months as we move to the off-peak season for the housing market,” said C.A.R. President Steve Goddard. “However, with affordable home prices, mortgage rates hovering around 5 percent, and the extension and expansion of the federal tax credit, we expect first-time and move-up home buyers to drive home sales through the end of this year and into early 2010.”

Closed escrow sales of existing, single-family detached homes in California totaled 562,400 in October at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide.

Statewide home resale activity increased 1 percent from the revised 557,050 sales pace recorded in October 2008. Sales in October 2009 increased 5.9 percent compared with the previous month. The statewide sales figure represents what the total number of homes sold during 2009 would be if sales maintained the October pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.The median price of an existing, single-family detached home in California during October 2009 was $297,500, a 3.2 percent decrease from the revised $307,210 median for October 2008, C.A.R. reported.

The October 2009 median price rose 0.3 percent compared with September’s $296,610 median price.“California’s median price rose for the eighth consecutive month in October and sales continued to show strength, signs that California has hit and passed the bottom of this real estate cycle,” said C.A.R. Vice President and Chief Economist Leslie-Appleton-Young. “The number of distressed sales as a share of total sales has shown considerable improvement since the beginning of the year, as a result of loan modifications and other efforts to prevent troubled mortgages from going into foreclosure. This has led to a decline in inventory levels since the start of the year that is more consistent with the price gains we have seen in recent months.

“For the first-time since July 2007, sales of homes priced $1 million or more rose in year-to-year comparisons,” said Appleton-Young. "While this is a welcome sign, the high end continues to be constrained by the lack of available financing in this sector.”

Highlights of C.A.R.’s resale housing figures for October 2009:. C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in October 2009 was 4 months, compared with 6.1 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.. Thirty-year fixed-mortgage interest rates averaged 4.95 percent during October 2009, compared with 6.20 percent in October 2008, according to Freddie Mac. Adjustable-mortgage interest rates averaged 4.55 percent in October 2009, compared with 5.21 percent in October 2008.

The median number of days it took to sell a single-family home was 34.1 days in October 2009, compared with 45.5 days (revised) for the same period a year ago. Regional MLS sales and price information are contained in the tables that accompany this press release. Regional sales data are not adjusted to account for seasonal factors that can influence home sales. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of REALTORS® throughout the state. MLS median price and sales data for condominiums are based on a survey of more than 60 associations.

The median price for both detached homes and condominiums represents closed escrow sales. In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 78 of the 391 cities and communities reporting showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. (The lists are generated for incorporated cities with a minimum of 30 recorded sales in the month.)

Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for October may be exaggerated due to compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through C.A.R. Online at http://www.car.org/economics/historicalprices/2009medianprices/oct2009medianprices.

Statewide, the 10 cities with the highest median home prices in California during October 2009 were: Palo Alto, $1,639,550; Los Altos, $1,592,550; Manhattan Beach, $1,037,500; Cupertino, $1,030,000; Newport Beach, $935,000; Los Gatos, $920,000; Rancho Palos Verdes, $900,000; Santa Barbara, $897,500; Lafayette, $867,500; and Santa Monica, $786,000.

Statewide, the cities with the greatest median home price increases in October 2009 compared with the same period a year ago were: Palo Alto, 49.1 percent; Atascadero, 33.3 percent; Cupertino, 24.2 percent; San Rafael, 24 percent; Emeryville, 22.2 percent, Livermore, 20.5 percent; Culver City, 19.4 percent; Pleasant Hill, 17 percent; La Habra, 16.2 percent, and Novato, 15.4 percent.

Here's a great article from the Chico Enterprise Record. Worth the read...

Butte County economic outlook: Housing brings a ray of hope
By LAURA URSENY - Staff Writer
Posted: 10/14/2009 12:16:10 AM PDT

CHICO -- Listeners had to dig deep into economist David Gallo's presentation Tuesday to get good news about the future, but some glimmer was there.
Housing seems to be about the only local sector that was somewhat upbeat.
Resident economist for the Center for Economic Development at Chico State University, Gallo believes the housing price decline has pretty much "hit bottom."
As potential buyers and investors think they've seen prices go as low as they can, they'll start jumping back in the market. They'll also start buying new or existing homes that have sat on the market for months. Once existing homes start disappearing, local builders will start constructing new ones. That demand for homes will help push housing prices up.
"And lenders are willing."
At least five houses are under construction at Sierra Moon, off Hicks Lane. Builder Steve Schuster has houses under construction in the mid-$400,000 to high $600,000 range.
"People have been sitting on the fence. Now they're buying," Schuster told the Enterprise-Record earlier this month. "I think their confidence has made the difference."
Schuster also said he did lower prices.
House prices are important, Gallo said. For homeowners, falling prices on their homes make them feel less wealthy, so they spend less. He said every $100 loss in home price means $6 less in annual spending. Homeowners are increasing their savings rate as well, from the 1-2 percent of retail spending flurry in the 1990s to about 6 percent now.
But it also encourages house purchases, especially if the buyer doesn't think the prices will go any lower. The stability of mortgage interest rates — which are at historic lows — also helps nudge buyers.
"From an investor's point of view, this is an attractive situation," said Gallo, pointing to cash purchases of foreclosures.
If interest rates and points remain at current levels, Gallo said housing activity should rise.
Nevertheless, Gallo's overall estimation of the economy is that, "It's going to be a long, slow recovery."
Citing a Federal Reserve forecast, Gallo said the downturn could start reversing in 2011.
"The Fed is telling us it will be a slow rate of recovery, more gradual than usual."
With city officials sitting in the front row for the presentation, Gallo said he didn't have any good news regarding sales tax revenue.
"National retail spending is down 10 percent. In California and Butte County, the decline is more."
With personal income down from lost wages, furloughs and pay cuts, savings and spending cutbacks are still a priority.
Watching for a rise in economic health, Gallo says there's hope at the national levels. Increases are being seen in factory orders and manufacturing activity, which means businesses are using up inventory and will have more money in their pockets to pay overtime or even hire.
Gallo doesn't see a lot of changes in local hiring patterns though, predicting continuing unemployment about the same.
"We're a ways from seeing unemployment rates drop because new jobs aren't being created," Gallo said, predicting that unemployment will continue rising through at least the first quarter in 2010. At that time, job creation could kick in.
Gallo pointed out that small businesses are the source of most new jobs, but that their establishment and growth has relied on their ability to qualify for equity loans, often on their homes.
With housing price declines, those lines of credit have been drying up, handicapping small businesses' ability to expand.
Asked about a comparison with the Great Depression, Gallo suggested the current downturn could be lasting about 11 quarters, whereas the 1930s downturn extended 36 to 40 quarters.
Gallo also presented a summary of his renewal energy study, which indicated solar has potential for job growth in the north state, and savings from residential solar installations will continue to justify the cost.
The presentation was sponsored by the Butte Community Employment Center. The presentation is on the Center for Economic Development's Web site: www.cedcal.com (under events, past events).

President Obama on Friday, Nov. 6 signed a bill extending and expanding the Federal Tax Credit for Home Buyers.

The bill passed the U.S. House of Representatives yesterday and the U.S. Senate late Wednesday. The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a reduced credit of up to $6,500.

Existing homeowners will be eligible for the $6,500 if they have lived in their current residences for at least five years. The bill also will increase the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers, to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000.

Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.