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.

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.

Article source: https://www.mercurynews.com/2019/03/01/realtor-officials-say-january-home-sales-drop-price-adjustments-indicate-rebalancing-of-market/

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