California’s housing market bounced back in May with strong monthly and annual gains in existing home sales and median home price in every major region of the state. The Inland Empire experienced the largest sales gain with a 9 percent increase in existing home sales from last May, followed by an increase of 6.9 percent in the Los Angeles Metro Area, and a 4.9 percent rise in the San Francisco Bay Area.
Information collected by the California Association of Realtors from 90 Realtor associations and MLSs statewide, shows closed escrow sales of existing, single-family detached homes in California totaled 430,060 units in May. The May sales figure was up 5.4 percent from the revised 408,030 level in April and up 2.6 percent compared with home sales in May 2016 of a revised 419,000.
Mortgage rates dropping to the lowest level since November could have been a motivating factor for the May sales increase, according to Geoff McIntosh, president of the state Realtor association. “The low interest rate environment, however, may not last long as the Federal Reserve’s gradual rate hike and plan to reduce its balance sheet will likely lead to higher rates, and could change the momentum of the market,” said McIntosh.
The statewide median price stayed above the $500,000 mark for the third straight month, reaching the highest level since August 2007. The median price was up 2.3 percent from a revised $537,920 in April to reach $550,200 in May, and was 5.8 percent higher than the revised $519,930 recorded in May 2016.
The May sales increase was wide reaching as every major region in the state posted an increase over the previous year. Month-to-month and year-to-year sales in Santa Clara County were up 26.2 percent and 6 percent, respectively. The median sales price of a Santa Clara County home in May rose to $1,200,000, 3.4 percent higher than the April median of $1,160,000 and 9.1 percent higher than the May 2016 median of $1,100,000.
Alameda, San Mateo, and Santa Clara counties had the lowest inventory, at 1.7 months in May. A six-month supply is considered normal for the state.
“The lack of inventory has become a serious issue in the Bay Area and unless it is addressed, will continue to drive up home prices and create an even more challenging affordability situation, especially for first-time homebuyers,” said Denise Welsh, president of the Silicon Valley Association of Realtors.
“Without more new homes, the only other way we can generate new inventory is for people to sell; yet we advise them to hold property as an investment. It’s a catch-22 without an easy solution,” added Welsh. “We just simply have to build more homes. We need at least 65,000 more housing units to keep pace with population growth.”
Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to email@example.com.