Let’s talk about california real estate and how the market seems to moving in a very healthy direction. I’ll start with some basic numbers so you can talk about them at your next party…
1) In January 2009, 69.5 percent of all homes sold in California were distressed sales – this includes short sales, defaults and bank owned (REO) properties. That means 7 out of every 10 homes sold in 2009 was a distressed sale!
Five years later that number has dropped to just 15% of the overall market.
2) The median price of a home in California has soared more than 64 percent in five years. 2009 – $249,960 to 2014 – $410,990.
I could stop now and this would be enough good news!
California’s distressed housing market is a shadow of what it was at the height of the Great Recession, as reported this week by the California Association of Realtors (CAR). The equity gain over this period is the primary cause in the drop of distressed sales in this state as well as across the country. In fact, the statewide share of equity sales has been over 80% for the past seven months.
Here are a few more positive statistics:
In January 2009 – the distressed sales market share was very high; Stanislaus County had 93.6% distressed sales, San Joaquin County 89.5%, San Benito County 86.1%, Kern County 85.6% and the list goes on. Today Stanislaus is at 25.1%, and except for Fresno County’s 26.3% – every other county is now below 20% as distressed sales.
Of the reporting counties, the lowest share of distressed sales were in San Luis Obispo (10.2%), Orange (9.5%), Santa Clara (7.7%) and San Mateo (6.8%)
Note that you never drop below 3% – 4% because there’s always going to be some distressed properties.
To put this into perspective, locally, in Ventura County only 1 out of every 1,038 homes is in some state of foreclosure. In Los Angeles County only 1 out of every 1,064 homes is distressed. Compared to other top metropolitan location around the country we’re looking really good here! The worst foreclosure area of the country is in Tampa/St. Petersburg which has 1 out of every 318 homes in distress. And 9 out of the top 10 major metropolitan areas in the country for the most foreclosures is in Florida. In California – our largest metropolitan community that is suffering is in the Riverside/San Bernardino area with 1 of every 596 homes in distress.
See the chart below for the current foreclosure levels throughout the state.
Because of the nature of this price inflation beast the pace of home sales has slowed in most areas of California over the past few months. Also the lack of good salable inventory is a contributing factor. So when the press states that ‘home sales are declining’ it’s not for the lack of hard working Realtors. We would sell many more homes at below the median price levels if we had them to sell. They just don’t exist anymore.
Does this mean we are peaking or near a bubble? In my opinion, we’re not even close. The recent trend is a normal slow down in a very hot market and this was expected. This is how the market compensates for a 64% appreciation level in 60 months.
Home prices will continue rising, albeit at a slower pace, but they are still moving in the right direction. As long as interest rates stay near the current low levels I expect to see a healthy real estate market over the next few years.
If you are a buyer and you’ve put off purchasing until you find the “perfect” home, don’t wait any longer. There is no perfect home. You make it perfect after you move in and make it your own. And if you’re a future seller, price your home competitively and you’ll see a high demand for your property. It’s a great time to move up. California real estate will remain strong over the long run.
To see trending market data & prices for 12 specific markets be sure to see Market Trends