Real Property Report - California, July 2015
Summer Sales Cool Off
Home Sales Decline 4 Percent in July
Median Home Prices Unchanged from June, Highest Since November 2007
CALIFORNIA, AUGUST 19, 2015 -- California single-family home and condominium sales fell 4.0 percent to 41,143 in July from 42,872 in June but were up 10.6 percent from 37,196 in July 2014. Driving the increase in year-over-year sales was the 14.2 percent increase in non-distressed property sales. Meanwhile, distressed sales retreated 6.6 percent. Despite the July pullback, distressed sales have trended mostly sideways for the past 18 months and remain a source of opportunity.
“After a better than expected showing in June, California real estate sales took a breather in July,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “In our May report, we forecast that high prices may limit sales in the last half of the year. So far, July sales appear to support that conclusion.”
The median price of a California home in July was $416,000, unchanged from June. At the county level, within California’s 26 largest counties, 16 counties saw median price decreases while 10 experienced price increases. The counties with the biggest median price decreases were Marin (-4.9 percent), Merced (-6.0 percent), San Luis Obispo (-6.7 percent) and Solano (-4.4 percent).
On a year-over-year basis, the median price of a California home was up 4.3 percent from $399,000 dollars in July 2014. Despite the slowdown in price appreciation, at the county level, year-over-year median price increases exceeded 5 percent in 17 of California’s 26 largest counties and 6 of those experienced double-digit price increases. The counties with the largest annual price increases were Kern (+11.1 percent), San Francisco (+15.4 percent), San Mateo (+23.3 percent) and Stanislaus (+12.6 percent).
“High prices have put a brake on sales,” said Schnapp. “Realtors in several northern California coastal counties have reported that asking prices have been lowered to attract buyers. That’s good news for buyers.”
“A few California counties continue to defy gravity due to what we call the ‘Google Effect’,” said Schnapp. “In July, for the first time in our records, the county with the highest median home price was San Mateo at $1.23 million, up 23.3 percent from a year ago. San Francisco County has held the most expensive county title since mid-2013 so it was a surprise to see San Mateo County topple San Francisco for the top spot.”
Flip sales have been steadily increasing since January 2015, up 2.3 percent for the month and 4.6 percent over the past 12 months. From July 2014 to January 2015, flip sales fell 32.6 percent. Since then, flip sales have increased 55.2 percent.
“Flippers are taking advantage of the double digit price increases since the beginning of the year,” said Schnapp. “The steady supply of distressed properties combined with the jump in prices has created an attractive environment for the flip investor to sell at a profit.”
In other California housing news:
- Cash sales in California fell 6.4 percent in July to 8,120 and represented 19.9 percent of total sales. Cash sales as a percentage of total sales remain high but have been steadily declining since reaching a peak of 40.0 percent of total sales in August 2011. Since then, cash sales are down 42.7 percent.
- Foreclosure notices and sales increased in July. For the month, Notices of Default and Trustee Sales were up 2.7 percent and 2.1 percent, respectively. Despite the increases, foreclosure notices are near their lowest levels in our records dating back to 2007. Foreclosure inventories fell 1.3 percent for the month and are down 8.3 percent year-over-year.
- The number of homeowners in a negative equity position extended its downward trend in July. Approximately 6.8 percent of homeowners, or 600,000, owed more than their home was worth, down 0.9 percent for the month and 43.7 percent from July 2014. To put the current negative equity level in perspective, in January 2015 there were just over one million California homeowners underwater.
- Institutional Investor (LLC and LP entities) purchases in July totaled 1,336, down 1.2 percent for the month but up 1.3 percent from July 2014. Since reaching a peak in December 2012, institutional investor demand has declined 42.2 percent due to the lower return on investment and dwindling supply of distressed properties for sale. Seasonality notwithstanding, since April 2014 monthly purchases have remained more or less constant at 1,350. Similarly, Trustee Sale purchases by LLC and LPs were down 83.9 percent from their October 2012 peak but have trended mostly sideways since May 2014.
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.