Real Property Report — California, September 2014

California Real Estate Market Stuck in Low Gear

September Sales Limited by High Prices, Declining Demand and Tougher Lending Standards

Truckee, Calif. (CA) – October 21, 2014 – September 2014 California single-family home and condominium sales fell 5.6 percent to 32,017 units from 33,931 in August.  In the past 12 months, sales are down 4.4 percent from 33,484 sales in September 2013.  September 2014 sales were the lowest September sales since 2007.

On a regional basis, over the past 12 months sales are down 3.7 percent in the Bay Area, 4.9 percent in Southern California, and 8.3 percent in the Central Valley.

“The California real estate market is stuck in low gear,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “High prices and relatively tough lending standards have pushed many would be homeowners to the sidelines.”

The steady decline of lower priced distressed properties available for sale has been a key factor depressing sales. Whereas in September 2013 23.0 percent of sales were distressed properties, in September 2014 distressed property sales comprised only 16.6 percent of the total.  In September 2011, 55.2 percent of sales were distressed property sales.

The median price of a California home in September was 385,000 dollars, down 1.3 percent from 390,000 dollars in August. Median prices have been flat 390,000 dollars since June 2014. On a year-ago basis, median home prices gained 8.5 percent, the slowest monthly gain since June 2012. Month-over-month price variations are impacted heavily by the sales of non-distressed properties, which in September comprised 83.5 percent of total sales. A better measure of median price movement occurs when sales are divided into distressed property sales and non-distressed property sales.  The median price of non-distressed homes fell 1.4 percent for the month but increased 5.3 percent over the past 12 months.  Meanwhile the median price of distressed homes was unchanged for the month is up 7.8 percent from a year ago.

On a county level, median price increases have slowed or peaked in many of California’s largest counties. In September 13 of California’s 26 largest counties experienced monthly price declines compared to only six in March.

“From mid-2012 through June of this year, median prices in most of California’s largest counties were experiencing double digit year-over-year increases,” said Schnapp.  “Since then, median prices increases have slowed or reversed in response to a fall-off in demand.”

In other California housing news:

  • Improvement in negative equity has stalled due to a slowdown in price appreciation. In September, negative equity positions were nearly unchanged from August. Slightly more than 1.0 million California homeowners, or 11.6 percent remain underwater. Historically elevated levels of negative equity will continue to exert a drag on the California real estate market.
  • Cash sales totaled 7,252 in September and were 22.4 percent of total sales. Cash sales have been steadily declining since reaching a peak of 40.0 percent of total sales, or 14,028, in August 2011.  Since then, cash sales have fallen 48.3 percent.
  • Flip sales fell 10.3 percent for the month and are down 34.2 percent for the year.  Flip sales are defined as properties that have been resold within six months. Flip sales comprised 3.5 percent of total sales in September, down from 3.7 percent of in August. Flip sales peaked in October 2012 at 5.1 percent of total sales and have declined 43.8 percent since then.
  • Institutional Investor LLC and LP purchases fell 16.8 percent for the month and are down 19.8 percent from August 2013. As the supply of distressed properties dwindle and prices rise, institutional investor demand has retreated due to the lower return on investment. In general, Institutional Purchases have posted consistent monthly declines since peaking in December 2012 and are down 51.9 percent since then.  Trustee sale purchases by LLC and LPs are down nearly 90.0 percent from their October 2012 peak.
  • Foreclosure starts, Notices of Default (NODs), fell 3.5 percent between August and September and are down 12.0 percent from September 2013. The downward trend extends a longer-term downward trend that began in March 2009. Foreclosure sales increased 11.2 percent for the month and are down 12.8 percent for the year.

For more information on September 2014 California property trends, please see PropertyRadar’s Real Property Report – California, September 2014. If you are unable to link to the report, please see the attached .pdf copy.

About PropertyRadar®
PropertyRadar provides software, data and analysis products for Real Estate professionals to find opportunities, lower risk and increase productivity. PropertyRadar has been serving its customers since 2007 (previous Brand name and older product known as ForeclosureRadar) and counts thousands of real estate investors, Realtors® and other real estate professionals among its subscribers. Bloomberg, 60 Minutes, Wall Street Journal, Los Angeles Times, San Francisco Chronicle, the Associated Press and many other leading media outlets have cited our data as the authoritative source for property-related reports, trends, graphs and insights. The company was launched in May 2007 by Sean O’Toole, who spent 15 years building software companies before entering the professional real estate market in 2002 where he successfully bought and sold more than 150 residential and commercial foreclosures.

PropertyRadar is privately held and is located at 12242 Business Park Drive, Truckee, CA 96161, 530-550-8801. For more information, visit * * *

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