Real Property Report – California, February 2016
Sales Flat in February, Median Price Falls 2.3 Percent
Cash Sales 25.3 Percent of Total Sales, Highest Since March 2014
Cash Buyers Still Plentiful Despite High Prices
CALIFORNIA, MARCH 16, 2016 – California single-family home and condominium sales were 24,409 in February 2016, nearly unchanged from a revised 24,273 in January 2016. Sales volumes are typically low this time of year, 43.5 percent below last year’s peak summer sales. On a year-ago basis sales were down 2.4 percent from a revised 25,022 in February 2015. Condominium sales represented 19.4 percent of total sales compared to 18.6 percent in February 2015.
In February 2016, single-family home sales were nearly unchanged for the month but were down 2.1 percent from February 2015. Meanwhile, condominium sales gained 1.1 percent for the month but were flat year-over-year.
“California’s real estate market went into early hibernation starting in October 2015,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “On a year-over-year basis, sales have been remarkably flat. That’s good news because the California real estate market continues to shrug off broader national and global financial turmoil. The bad news is that resilience has translated into flat markets for the foreseeable future.”
“Lack of inventory and high prices continues to stifle activity”, said Schnapp. “Our October 2015 headline, ‘Flat is the New Black’, looks more and more likely for the rest of 2016 as economic growth slows and real wages remain stagnant.”
The February 2016 median price of a California home was $390,000, down 2.3 percent from a revised January 2016 price of $399,000. On a year-ago basis, median home prices were up 3.7 percent from $376,000 in February 2015. The median price of a condominium was $379,000, down 2.8 percent from $390,000 in January 2016 but up 3.7 percent from $370,000 from a year ago.
“Not surprisingly given current economic conditions, year-over-year price growth halved this past month,” said Schnapp. “Price appreciation has definitely slowed which is good news for a market suffering from sticker shock.”
Cash sales of single-family home and condominiums were up 17.0 percent from January 2016 but down 1.9 percent from February 2015. February cash sales were 25.3 percent of total sales, the highest in 23 months.
Of the 26 largest counties in California, the counties with the highest percentage of cash sales were San Francisco (37.3 percent), Marin (36.2 percent), Santa Cruz (34.0 percent), Tulare (30.2 percent) and Fresno (28.1 percent).
“While the rest of the market went into hibernation for the winter, cash buyers came out in force at the highest level in almost two years,” said Schnapp. “Given recent price trends and volatile alternatives, buyers flush with cash are probably motivated to invest in real estate before prices rise with the spring and summer season.”
“Fortunately for the real estate markets, El Niño has made its presence known in Northern California, providing much needed snow to Tahoe ski resorts and filling reservoirs,” said Schnapp. “With the Sierra snow pack close to or above normal, easing the statewide drought, water-critical areas such as the Central Valley and tourism based economies, can now breathe a sigh of relief.”
In other California housing news:
- Flip Sales. This past February, flip sales gained 7.6 percent for the month and were up 15.9 percent over the past 12 months. Flip sales accounted for 4.0% of total sales, the highest since March 2014. Despite the monthly increase, flip sales are typically lower in January and February in response to seasonal forces that impact the overall real estate market. Flip activity will likely increase during the month of March, coincident with the start of the spring selling season.
- Negative Equity. The number of homeowners in a negative equity position edged higher this past month due to the seasonal decline in prices. Currently the number of negative equity households is slightly greater than 560,000. Despite the small increase this past month, since February 2015 half a million California homeowners are no longer underwater and can now participate in the real estate market. In February 2015 one in nine California homeowners were underwater, today that number is one in seventeen.
- Institutional Investor (LLC and LP entities) Purchases increased 16.9 percent in February 2016 recovering half of the January decline but were down 1.0 percent from February 2015. The seasonal decline in prices likely spurred investor activity this past month. Despite the increase, purchases are down 55.3 percent from their peak in December 2012.
- Trustee Sale purchases by LLC and LPs fell 2.3 percent for the month but were up 37.7 percent from February 2015. It is important to keep in mind that trustee sale purchases by LLCs and LPs are low so small increases and decreases in activity translate into large percentage increases or decreases. Taking a longer look, trustee sales are down 88.2 percent from their October 2012 peak and have trended mostly sideways since May 2014.
- Institutional Investor sales by LLC and LPs were up 5.6 percent for the month but were down 9.7 percent from February 2015. Despite the increase this past month, investor sales have been on a steady downward trend since reaching a peak in December 2012, falling 73.9 percent.
- Foreclosure Notices and Sales. Foreclosure Notices of Default (NODs) gained 3.5 percent from January 2016 and are up 8.1 percent since the beginning of the year and at their highest levels since April 2015. NODs typically fall during the holiday season and pick up again after the first of the year. Despite the increase, NODs were down 5.8 percent from a year ago. Meanwhile, Notices of Trustee Sale (NTSs) fell 3.9 percent for the month and were down 9.7 percent from February 2015. Despite recent activity, both NODs and NTSs are near their lowest levels in our records dating back to January 2007. Foreclosure sales fell 8.4 percent for the month, and are down 11.3 percent in the past 12 months.
Home Sales – Single-family residence and condominium sales by month from 2007 to current divided into distressed and non-distressed sales. Distressed sales are the sum of short sales, where the home is sold for less than the amount owed, and REO sales, where banks resell homes that they took ownership of after foreclosure. All other sales are considered non-distressed.
Year-over-Year Home Sales
Year-over-Year Home Sales Year-over-Year Home Sales – Single-family residences and condominiums sold during the same month for the current year and prior years divided into distressed and non-distressed sales.
Median Sales Prices vs. Sales Volume
Median Sales Price vs. Sales Volume – Median sales price (left axis) of a California single family home versus sales volume (right axis), by month from 2012 to current. Median sales prices are divided into three categories: All single-family homes (black line), distressed properties (red line), and non-distressed properties (blue line). Monthly sales volumes (right axis) are illustrated as gray and lavender bars. The gray bars are distressed sales and the lavender bars are non-distressed sales.
California Homeowner Equity
California Home Owner Equity – A model estimate of California homeowners segregated into various categories of levels of homeowner equity for a given month. Homeowner numbers represent a percentage of total California homeowners.
Cash Sales – The blue bars (right axis) illustrate cash sales of single-family residences and condominiums by month. The red line (left axis) illustrates cash sales as a percentage of total sales by month.
Flipping – The number of single-family residences and condominiums resold within six months.
Market Purchases by LLCs and LPs
Market Purchases by LLCs and LPs – The blue bars (right axis) illustrate market purchases of single-family residences and condominiums by LLCs and LPs from 2007 to current. The red line graph (left axis) illustrates LLC and LP purchases as a percentage of total sales by month.
Market Sales by LLCs and LPs
Market Sales by LLCs and LPs – The blue bars (right axis) illustrate market sales by LLCs and LPs of single-family residences and condominiums by month. The red line graph (left axis) illustrates sales as a percentage of total sales by month.
Trustee Sale Purchases by LLCs and LPs
Trustee Sale Purchases by LLCs and LPs – The blue bars (right axis) illustrate trustee sale purchases (foreclosure sales) of single-family residences and condominiums by LLCs and LPs from 2007 to current. The red line graph (left axis) illustrates purchases as a percentage of total trustee sales by month.
Foreclosure Notices and Sales
Foreclosure Notices and Sales – Properties that have received foreclosure notices — Notice of Default (green) or Notice of Trustee Sale (blue) — or have been sold at a foreclosure auction (red) by month.
Foreclosure Inventory – Preforeclosure inventory estimates the number of properties that have had a Notice of Default filed against them but have not been Scheduled for Sale, by month. Scheduled for Sale inventory represents properties that have had a Notice of Trustee Sale filed but have not yet been sold or had the sale cancelled, by month. Bank-Owned (REO) inventory means properties sold Back to the Bank at the trustee sale and the bank has not resold to another party, by month.
Real Property Report Methodology
California real estate data presented by PropertyRadar, including analysis, charts and graphs, is based upon public county records and daily trustee sale (foreclosure auction) results. Items are reported as of the date the event occurred or was recorded with the California County. If a county has not reported complete data by the publication date, we may estimate the missing data, though only if the missing data is believed to be 10 percent or less.