Real Property Report – California, July 2016

California’s Underwater Homeowners Fall Below 500,000, Down 50 Percent from July 2014

July Sales Dive 12.8 Percent Y-o-Y, or Did They?

California Median Price Edges Lower in July, but still Up 5.0 Percent Y-o-Y

CALIFORNIA, AUGUST 18, 2016 – California single-family home and condominium sales were 37,823 in July, falling 10.4 percent for the month and down 12.8 percent from July 2015. Taking a longer-term view, year-to-date sales (January through July 2016) totaled 244,035 properties, down 2.0 percent from the same time period in 2015.

“At first glance, it looked like July sales fell off a cliff,” said Madeline Schnapp Director of Economic Research for PropertyRadar. “Looking closer at the data, we noted that July 2016 had two fewer business days than July 2015. That calendar quirk was enough depress July sales. When the missing days were taken into account, the sales decline was approximately 3.0 percent for the month and 5.0 percent for the year, in line with expectations.”

“With or without July’s calendar distortions, sales were tepid this past month,” said Schnapp. “June sales will likely represent the peak of the 2016 season and are expected to retreat from here on out.”

PropertyRadar-PropertyRadar-NegEquity_July_2016

The number of homeowners in a negative equity position fell to 472,000, or 5.4 percent of all California homeowners.

The number of homeowners in a negative equity position fell to 472,000, or 5.4 percent of all California homeowners. Since July 2014, the number of negative equity homeowners has fallen more than 50 percent. Currently, one in 18 homeowners are underwater, down from one in eight 24 months ago.

“The silver lining to rising prices is in the past two years 575,000 California homeowners have escaped their negative equity prisons,” said Schnapp. “Now armed with positive equity, these homeowners can take advantage of near record low mortgage interest rates to refinance, sell an existing home and buy a new one.”

The July 2016 median price of a California home was $438,000, down 0.7 percent, from a revised $441,000 in June. On a year-ago basis, median home prices were up 5.0 percent from $417,000. The median price of a condominium was $417,000, down 0.2 percent from an adjusted $418,000 in June 2016 and up 4.3 percent from $400,000 in July 2015.

At the county level, July median home prices in 17 of California’s 26 largest counties were flat to lower from the previous month.

“The good news for California home buyers is that median prices fell in more than half of California’s largest counties,” said Schnapp. “Despite July’s pullback, we forecast prices are more likely to trend sideways rather than materially decline.”

Cash sales of single-family homes and condominiums fell in July 2016, retreating 8.2 percent for the month and down 12.7 percent from July 2015. Cash sales were 18.1 percent of total sales, down nearly 2.0 percent from 19.9 percent in June 2016.

“Cash sales retreated this past month as the overall market pulled back from June highs,” said Schnapp. “Some of the pull-back is likely related to the July calendar quirks, but the highs for this year’s selling season are likely behind us.”

In other California housing news:

  • Flip Sales fell 2.4 percent from June2016 and were down 14.6 percent over the past 12 months. Flip sales accounted for 2.8% of total sales, the lowest since May 2011. July flip sales are likely under-represented due to this month’s calendar quirk.
  • Trustee Sale Purchases by LLC and LPs gained 3.0 percent for the month and were up 19.9 percent from a year ago. The outsized year-ago increase is off a depressed low so not really significant. Despite the recent uptick, trustee sale purchases have been trending mostly sideways since November 2013.
  • Institutional Investor Purchases by LLC and LPs fell 5.9 percent from June 2016 and were down 7.1 percent from July 2015. Despite the pull-back, investor purchases have trended mostly sideways since 2014.
  • Institutional Investor Sales by LLC and LPs fell 6.6 percent for the month and were down 11.2 percent from July 2015. July calendar quirks have artificially depressed investor sales this past month. We expect easier comparisons in August.
  • Foreclosure Notices. Notices of Default (NODs) fell 15.1 percent from June 2016 and were down 7.0 percent in the past 12 months. Notices of Trustee Sale (NTS) were down 17.3 percent for the month and fell 20.3 from July 2015. Both NODs and NTS’ were artificially depressed 5-10 percent due to the July calendar quirk.
  • Foreclosure Sales fell 7.0 percent for the month and were down 15.3 percent from July 2015 and were also impacted by the July calendar distortions.

Home Sales

PropertyRadar-PropertyRadar-CASales_July_2016Home 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

PropertyRadar-PropertyRadar-Y-o-Y_July_2016Year-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.

Year-to-Date Home Sales

PropertyRadar-PropertyRadar-YTDSalesJan-July_2016Year-to-Date Home Sales – The sum of year-to-date sales of single-family residences and condominiums for the current year and prior years divided into distressed and non-distressed sales.

Median Sales Prices vs. Sales Volume

PropertyRadar-PropertyRadar-Median_July_2016Median 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

PropertyRadar-PropertyRadar-NegEquity_July_2016California 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

PropertyRadar-PropertyRadar-cash_July_2016Cash 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

PropertyRadar-PropertyRadar-Flip_July_2016Flipping – The number of single-family residences and condominiums resold within six months.

Market Purchases by LLCs and LPs

PropertyRadar-PropertyRadar-LLCPurchases_July_2016Market 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

PropertyRadar-PropertyRadar-LLCSales_July_2016Market 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

PropertyRadar-PropertyRadar-LLCTrustee_July_2016Trustee 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

PropertyRadar-PropertyRadar-FCNoticesandSales_July_2016Foreclosure 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 Inventories

PropertyRadar-PropertyRadar-FCInventory_July_2016Foreclosure 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.