Is Now a Good Time to Buy or Sell Real Estate?
HOW HAS THE REAL ESTATE PROCESS CHANGED?
As the pandemic hit, real estate and mortgage professionals across the country revised their processes to adapt to shifting safety standards and economic realities. While these new ways of conducting business may seem strange at first, keep in mind, military clients, international buyers, and others have utilized many of these methods to buy and sell homes for years.
New Safety Procedures
The safety of our clients and our team members is our top priority. That’s why we’ve developed a process for buyers and sellers that utilizes technology to minimize personal contact.
For our listings, we’re holding online open houses, offering virtual viewings, and conducting walk-through video tours. We’re also using video chat to qualify interested buyers before we book in-person showings. This enables us to promote your property to a broad audience while limiting physical foot traffic to only serious buyers.
Likewise, our buyer clients can view properties online and take virtual video tours to minimize the number of homes they step inside. Ready to visit a property in person? We can decrease surface contact by asking the seller to turn on all the lights and open doors and cabinets before your scheduled showing.
The majority of our “paperwork” is also digital. In fact, many of the legal and financial documents involved in buying and selling a home went online years ago. You can safely view and eSign contracts from your smartphone or computer.
IS IT THE RIGHT TIME FOR ME TO MAKE A MOVE?
The reality is, there’s no “one size fits all” answer as to whether it’s a good time to buy or sell a home because everyone’s circumstances are unique. But now that you know the state of the market and what you can expect as you shop for real estate, consider the following questions:
- Why do you want or need to move?
It’s important to consider why you want to move and if your needs may shift over the next year. For example, if you need a larger home for your growing family, your space constraints aren’t likely to go away. In fact, they could be amplified as you spend more time at home.
However, if you’re planning a move to be closer to your office, consider whether your commute could change. Some companies are rethinking their office dynamics and may encourage their employees to work remotely on a permanent basis.
- How urgently do you need to complete your move?
If you have a new baby on the way or want to be settled before schools open in the fall, we recommend that you begin aggressively searching as soon as possible. With fewer homes on the market and a lengthier closing process, it’s taking longer than usual for clients to find and purchase a home.
However, if your timeline is flexible, you may be well-positioned to score a deal. We’re seeing more highly-incentivized sellers who are willing to negotiate on terms and price. Talk to us about setting up a search so we can keep an eye out for any bargains that pop up. And get pre-qualified for a mortgage now so you’ll be ready to act quickly.
If you’re eager to sell this year, now is the time to begin prepping your home for the market. A second wave of infections is predicted for the winter, which could mean another lockdown.14 If you wait, you might miss your window of opportunity.
- How long do you plan to stay in your new home?
The U.S. real estate market has enjoyed steady appreciation since 2012, which made it fairly easy for owners and investors to buy and sell properties for a profit in a short period of time. However, with home values expected to remain relatively flat over the next year, your best bet is to buy a home you can envision yourself keeping for several years. Fortunately, at today’s rock-bottom mortgage rates, you can lock in a low interest rate and start building equity right away.
- Can you meet today’s higher standards for securing a mortgage?
Mortgage lenders are tightening their standards in response to the growing number of mortgage forbearance requests. Many have raised their minimum credit score and downpayment requirements for applicants. Even if you’ve been pre-qualified in the past, you should contact your lender to find out if you meet their new, more stringent standards.
- Is your income stable?
If there’s a good chance you could lose your job, you may be better off waiting to buy a home. The exception would be if you’re planning to downsize. Moving to a less expensive home could allow you to tap into your home equity or cut down on your monthly expenses.
WHEN YOU’RE READY TO MOVE—WE’RE READY TO HELP
While uncertain market conditions may give pause to some buyers and sellers, they can actually present an opportunity for those who are willing, able, and motivated to make a move.
Your average spring season would be flooded with real estate activity. But right now, only motivated players are out in the market. That means that if you’re looking to buy, you’re in a better position to negotiate a great price. And today’s record-low mortgage rates could give a big boost to your purchasing power. In fact, if you’ve been priced out of the market before, this may be the perfect time to look.
If you’re hoping to sell this year, you’ll have fewer listings to compete against in your neighborhood and price range. But you’ll want to act quickly. Economists expect a surge of eager buyers to enter the market in July—so you should start prepping your home now. And keep in mind, a second wave of coronavirus cases could be coming in this winter. Ask yourself how you will feel if you have to face another lockdown in your current home.
Let’s schedule a free virtual consultation to discuss your individual needs and circumstances. We can help you assess your options and create a plan that makes you feel both comfortable and confident during these unprecedented times. We can be reached at 1-949-466-6876.
Sept. 23, 2020
California housing market continues recovery as median home price breaks $700,000 mark, C.A.R. reports
- Existing, single-family home sales totaled 465,400 in August on a seasonally adjusted annualized rate, up 6.3 percent from July and up 14.6 percent from August 2019.
- August’s statewide median home price was $706,900 up 6.1 percent from July and up 14.5 percent from August 2019.
- Year-to-date statewide home sales were down 6.8 percent in August.
LOS ANGELES (Sept. 16) – California’s housing market continued to improve in August as home sales climbed to their highest level in more than a decade as the median home price broke last month’s record and hit another high, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 465,400 units in August, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2020 if sales maintained the August pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
August’s sales total climbed above the 400,000 level for the second straight month since the COVID-19 crisis depressed the housing market earlier this year, marking the first time since the summer of 2016 that sales increased from the previous month three months in a row. August sales rose 6.3 percent from 437,890 in July and were up 14.6 percent from a year ago, when 406,100 homes were sold on an annualized basis.
“California’s strong housing recovery in terms of sales and price over the past few months is encouraging as motivated buyers are eager to purchase homes amid the lowest interest rates ever, which led to the fastest sales growth in a decade,” said 2020 C.A.R. President Jeanne Radsick, a second-generation REALTOR® from Bakersfield, Calif. “However, persistently low housing inventory will continue to push up home prices due to heavy buyer competition, which is starting to outweigh the benefits of record low interest rates and hamper housing affordability.”
With home sales continuing to bounce back in August and sales of higher-priced properties recovering faster than the rest of the market, the statewide median price hit another new high after setting records in June and July. California’s median home price broke the $700,000 mark for the first time, reaching $706,900 in August, a 6.1 percent jump from July’s $666,320 and 14.5 percent from $617,410 in August 2019. The yearly price increase was the highest recorded since March 2014 and larger than the six-month average of 4.3 percent observed between February 2020 to July 2020.
“Low rates and tight housing inventory are contributing factors to the statewide median price setting a new record high three months in a row from June to August, said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “A change in the mix of sales is another variable that keeps pushing median prices higher, as sales growth of higher-priced properties continued to outpace their more affordable counterparts.”
Reflecting the rise in home prices, consumers continue to say it is a good time to sell, according to C.A.R.’s monthly Consumer Housing Sentiment Index. Conducted in early September, the poll found that 58 percent of consumers said it is a good time to sell, up from 54 percent a month ago, and up from 46 percent a year ago. Meanwhile, low interest rates continue to fuel the optimism for homebuying; 34 percent of the consumers who responded to the poll believed that now is a good time to buy a home, sharply higher than last year, when 22 percent said it was a good time to buy a home.
Sept. 11, 2020
The housing market remains strong as rates hover below 3% and buyer demand continues to accelerate to unseasonably strong levels. Last week, unemployment dipped into the single-digits, small businesses were more confident last month, the service sector continued its recovery, and construction spending and industrial production also ticked up. However, supply is beginning to severely constrain existing home sales and the labor market recovery has decelerated significantly, so even as things continue to look better, the pace of improvement is slower and uncertainty abounds. Caution, prudence, and hard work remain the operative themes for the remainder of 2020.
REALTORS® Reported Encouraging Business Results Last Week: The percentage of REALTORS® who saw an improvement in their business last week was up with 11.8% more doing a listing appointment last week, 20% more actually listing a property on the MLS, and 10.7% more respondents closing a transaction last week.
Interest Rates Near All-Time Lows Amidst Strong Buyer Demand: The average contract rate on a 30-year fixed-rate mortgage was 2.93% last week. That was up slightly from the previous week’s 2.91%, but rates remain near historic lows and this continues to drive demand for housing. New purchase mortgage applications were up more than 40% from 2019 levels last week and the index of private showing requests remains more than 150% higher than at the same point in 2019 despite the ongoing economic challenges.
August Unemployment Rate Dips Below 10%: Last week, the Department of Labor reported that the U.S. unemployment rate dipped to 8.4% in August. And, although there was a slight change in the underlying methodology which makes comparisons to the previous few months difficult, this marks significant ongoing progress, nonetheless.
Closed Sales Feeling the Sting of Limited Inventory: Closed sales in California declined to their lowest level since early July last week. An average of 869 homes were reported closed on the MLS last week—down from 961 per day the previous week. In addition, new listings have been essentially flat since early July, which has caused pending sales to decline for the past 3 weeks consecutively despite robust demand from buyers.
REALTORS® Optimism About Future Slides Modestly Last Week: The California REALTORS® we spoke to over the weekend were slightly less optimistic than last week: expectations for listings to increase next week was down 8.8%, expectations for sales to improve was down 5%, and expectations for higher prices decreased 11.1%.
Looks Can Be Deceiving in August Employment Report: The single-digit unemployment rate is welcome news, and yet the pace of hiring has slowed significantly. Only 1.371 million jobs were created last month—down from 1.734 million the month prior. More significantly, more than 300,000 jobs were temporary and added by the government to conduct the 2020 census, which means that the private sector jobs recovery slowed even more than the headline figure suggests. In addition, unemployment claims remain stubbornly high here in California and the rest of the U.S., which will exert a drag on the ongoing recovery.
The news remains mixed despite appearing more robust at first glance. The economy and housing market continues to make solid progress, but that pace of the improvement has slowed significantly. In addition to the uncertainty associated with the virus, the largest challenge facing California’s housing market is the lack of supply available to the surging number of potential homeowners that want to buy.
Sept. 4, 2020
Increased optimism remains an ongoing theme in our weekly survey of California REALTORS®. Business conditions have held onto the gains made over the past two months and attitudes about the future have rebounded as well. More are reporting getting deals done, fewer are reporting buyers and sellers getting cold feet, and the economy at large shows more signs of progress. However, the buying seasons does appear to be slowly winding down after extending well into the fall.
REALTORS® Closing On The Homes That Went Pending in July: Although the percentage of REALTORS® who closed a deal last week dipped 7% from the previous week, the past two weeks have seen the largest percentage of respondents with a closed transaction during the week since we began asking the question nearly 4 months ago. Thus, C.A.R. is expecting strong closed sales numbers in our August press release.
REALTORS® Remain Optimistic About Recovery: The California REALTORS® we spoke to over the weekend were slightly more optimistic than last week: expectations for listings to increase next week was up 3%, expectations for sales to improve was flat, and expectations for higher prices increased 10%. In addition, REALTORS® are markedly more optimistic about these indicators than they were a month prior.
Several Macro Indicators Show Improvement: Last week, we received further evidence of slow improvement in the broader economy as income and spending increased in July with more than government transfer payments responsible for the boost. In addition, industrial production increased last month, the decline in Q2 GDP was revised lower, and durable goods and capital goods orders both increased.
Rates Decline and Demand Remains Robust: After increasing slightly the previous week, the average contract rate for a 30-year, fixed-rate mortgage dipped to 2.91% last week. This is slightly higher than the previous all-time low but represents an incredible opportunity for borrowers looking to get into the housing market. This is likely behind the ongoing strength in mortgage applications for new purchases, which remained ahead of 2019 levels by more than 30% last week.
Sales Down Alongside Forward-Looking Measures: Despite the increase in the number of REALTORS® who reported closing deals, the number of closed sales reported on the MLS last week declined by 3.4% last week statewide. Each region except the Bay Area experienced a single-digit decline. By price, everything fell last week excepting $800K-$1M and $5M +. Looking forward, pending sales were at their lowest levels in more than a month and they are following new listings, which were at their lowest level in nearly two months last week.
Summer Prices Finally Cooling Down: Although coronavirus has had little impact on prices thus far, the summer peak does appear to be behind us after extending well into August. On a per square foot basis, median list prices have come down in each major region of the state in the past 5 weeks excepting the Far North and Central Coast. Closed prices on deals negotiated a month or more ago remain high, and discounting has decreased in recent weeks, so this is largely due to typical seasonal cooling.
Forward looking indicators suggest that we will see slowing after a strong August and September. New unemployment claims in California actually increased last week even as other economic indicators improved so the state is far from out of the woods. Rates remain low and demand remains robust, but the state needs new listings badly in order to fuel the recovery that we have enjoyed up to this point.
Aug. 20, 2020
C.A.R.’s July 2020 resale housing report include:
- At the regional level, sales increased in all major regions from last year and was particularly strong in the Central Coast region, which posted a 21.9 percent gain. Sales increased 14.8 percent in the San Francisco Bay Region, 6.6 percent in the Central Valley and 5.4 percent in Southern California. However, the outlook for the Southern California region looks promising in the upcoming month as July pending sales growth for both Los Angeles and Orange counties appears to be strong.
- Nearly nine of ten of counties - 44 of 51 - tracked by C.A.R. experienced a year-over-year gain in closed sales, with Amador increasing the most from last year at 82.6 percent, followed by Mariposa (76.9%) and Plumas (76.3%). Counties with a sales increase from last year averaged a gain of 25.8 percent. Six counties had a loss in sales in the latest month, with Sutter declining the most at 5.9 percent from last year.
- Median home prices increased in all regions in July, with both the Central Coast and San Francisco Bay Area climbing more than 10 percent from last year. The Central Valley and Southern California also grew solidly with high-single-digit increases. Both regions also set a new record high in median price in July, while the San Francisco Bay Area median price matched the record high set in May 2018.
- All but three of the 51 counties tracked by C.A.R. reported a year-over-year price gain in July, with 23 counties recording an increase of more than 10 percent. Mariposa had the highest price increase from last July, growing 51.0 percent from a year ago. The three counties that experienced a price drop were Lassen (-8.9%), Glenn (-4.2%) and Mono (-3.3%).
- Housing inventory continued to trend downward on a year-over-year basis, with active listings falling more than 25 percent for the eighth consecutive month. The year-over-year 48 percent decline was the biggest drop in active listings since January 2013. The continued recovery in closed escrow sales, combined with a sharp drop in active listings, led to a plunge in the Unsold Inventory Index (UII) to 2.1 months in July, down from 3.2 months a year ago. The index indicates the number of months it would take to sell the supply of homes on the market at the current rate of sales. The July UII was the lowest level since November 2004.
- The supply of homes for sale continued to decline significantly across the state, with all regions falling more than 30 percent in active listings from last year. Southern California had the biggest annual drop in inventory in July at 50.7 percent – less than half the level of for-sale properties it had a year ago. All counties in Southern California dropped more than 40 percent, but the two most affordable counties in the region – Riverside and San Bernardino – continued to experience the sharpest decline in supply.
- The San Francisco Bay Area had a relatively small decline in supply when compared to other areas, as seven of its nine counties decreased in active listings by 31 percent or more in July. The Bay Area was tied with the Central Valley Region for having the lowest inventory at 1.8 months. San Francisco and San Mateo were the only counties in the region with an increase in active listings from last year.
- The median number of days it took to sell a California single-family home was 17 days in July, down from 21 in July 2019.
- C.A.R.’s statewide sales-price-to-list-price ratio* was 100 percent in July 2020 and 99 percent in July 2019.
- The statewide average price per square foot** for an existing single-family home was $304 in July 2020 and $290 in July 2019. The July 2020 figure was the highest since October 2007.
- The 30-year, fixed-mortgage interest rate averaged 3.02 percent in July, down from 3.77 percent in July 2019, according to Freddie Mac. The five-year, adjustable mortgage interest rate was an average of 3.02 percent, compared to 3.47 percent in July 2019.
Aug. 7, 2020
August 6, 2020
California’s housing market had several positive signs last week based on broader economic data, market data reported on the MLS last week, a survey of California REALTORS® taken over the weekend and data on the pandemic itself. And yet, even as the housing market remains a relative bright spot, several key economic indicators show that the effects of the recession continue to weigh heavily on the pace of the recovery.
According to a survey of California REALTORS®, the market was generally better for them last week across a variety of measures. The percentage of REALTORS® that answered the weekly survey who said they had a buyer withdraw an offer last week fell from 11% the week before to 10% over the weekend. Fewer sellers (13%) removed their homes from the market. More REALTORS® had a listing appointment last week (36%), listed a property (28%), entered escrow (29%), and closed a transaction (32%).
Market Data: Additionally, market data also improved last week and suggests the uptick in sales that California enjoyed in June will likely persist into July and August. Closed sales increased 3.1% last week to an average of 913/day. This is perhaps unsurprising given that buyer demand, particularly here in California, remains very robust. Mortgage applications nationwide remained more than 20% above 2019 levels and requests for showings in California are more than 90% higher than they were at this time last year.
Public Health: California is even starting to see some hopeful signs on the public health front of late as the number of hospitalizations due to COVID-19 has plateaued in recent weeks.
Economy: And yet, even as California’s housing market and economy see signs of life, the challenges we face remain very much ongoing. Recently released data on the second quarter shows that the economy contracted by 32.9% -- the largest quarterly decline in recorded history. In contrast, the U.S. economy shrank by less than 18% during the Great Recession of 2009.
Labor Market: The labor market has also begun to suffer from reduced activity as many businesses are forced to close again. Jobless claims both nationally and here in California rose again last week, indicating that the number of workers losing their jobs has begun to rise again. In fact, the increase to 289,600 new jobless claims last week means that job losses have increased in six out of the past 10 weeks in California.
Pending Sales: Even within the housing data, there were signs of ongoing difficulty last week. Pending sales have not risen during the past three weeks due, in large part, to weaker activity in Southern California. This, in turn, is likely due to inventory, which tightened back up significantly after May’s retrenchment in closed sales subsided.
Inventory: And inventory will remain an obstacle for California’s recovery—especially amidst such robust demand. New listings were down 6.8% last week to an average of 916/day and were essentially flat for the preceding 3 weeks. And, with the number of COVID-related deaths in California still rising and the real estate market facing ongoing restrictions that make it challenging to list and sell homes, inventory is likely to remain depressed for the near term.
Thus, even as California continues to make progress, it is critical that we temper our optimism with realism. Many Californians want to buy: their home is more important now than ever before given that people are spending so much time there; they have more flexibility with their housing decision because they can now work from home; rates are low and have provided a significant boost to affordability. Yet for sellers there remain cautions—even as the data suggest that inventory is near record lows, homes are selling very quickly, and there is minimal evidence of discounting on the typical home.
July 20, 2020
All time low interest rates make it a great time to buy a home!
The new average interest rate on a 30-year fixed-rate mortgage broke below 3% this week—for the first time ever—to 2.98%, according to Freddie Mac’s latest Primary Mortgage Market Survey.
What You Need to Qualify for a Mortgage Rate Below 3%
Although the advertised rates for many lenders are hitting the low 3% range—or lower—some borrowers might be surprised that qualifying for an ultra-low rate is challenging. Lenders have raised minimum borrowing requirements in response to the economic downturn and jump in unemployment.
Rates Vary by Lender, Making it Important to Shop Around
Borrowers should also note that not only do rates vary among banks, but so does the annual percentage rate, or APR. The APR is the all-in cost of the mortgage. It includes the interest rate, as well as mortgage insurance, discount points and origination fees. While the interest rate is important, borrowers should look at the APR to get the true cost of the loan.
For example, the average rate on a 30-year fixed-rate mortgage at Bank of America is 3.375%, but the APR is 3.563%—which is the total cost of your mortgage. At Wells Fargo the rate for a 30-year fixed-rate mortgage is 3%, with an APR of 3.093%.
Quicken Loans, for example, quotes higher interest rates for VA and FHA 30-year mortgages than other government-backed conventional loans, whereas Wells Fargo doesn’t distinguish between FHA and government-backed loans up front.
The bottom line is that borrowers should shop around. It’s important to know what the average interest rate is and what today’s borrower requirements are, as they have gotten stricter since the coronavirus emerged. Contact us today to find out what rate you qualify for.
July 17, 2020
California housing market claws back past two months of losses in June as median home price sets another record high, C.A.R. reports
- Existing, single-family home sales totaled 339,910 in June on a seasonally adjusted annualized rate, up 42.4 percent from May and down 12.8 percent from June 2019.
- June’s statewide median home price was $626,170, up 6.5 percent from May and up 2.5 percent from June 2019.
- Year-to-date statewide home sales were down 12.9 percent in June.
LOS ANGELES (July 16) – After falling to the lowest level since the Great Recession, California’s housing market rebounded in June with the largest month-to-month sales increase in nearly 40 years, while the median home price set another record high, the CALIFORNIA ASSOCIATION OF REALTORS®(C.A.R.) said today.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 339,910 units in June, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2020 if sales maintained the June pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
Reversing a two-month consecutive drop below 300,000 units caused by the coronavirus pandemic, June’s sales total climbed 42.4 percent from 238,740 in May and was down 12.8 percent from a year ago, when 389,730 homes were sold on an annualized basis. The month-to-month increase was the largest since C.A.R. began reporting monthly sales in January 1979.
“Home sales bounced back solidly in June after hitting a record bottom in May, as lockdown restrictions loosened and pent up demand driven by record-low interest rates roared back,” said 2020 C.A.R. President Jeanne Radsick, a second-generation REALTOR® from Bakersfield, Calif. “While the momentum is expected to be sustained as we kick off the third quarter, the resurgence in coronavirus cases remains a concern and may hinder the market recovery in the second half of the year.”
A strong surge in home sales in June provided support to home prices, as the statewide median price set a new record high after dipping briefly below $600,000 in May. California’s median home price reached $626,170 in June, improving 6.5 percent from May and 2.5 percent from June 2019. The monthly price increase was higher than the historical average price change from May to June and, in fact, was the highest ever recorded for a May-to-June change.
A change in the mix of sales was one primary factor that pushed the median price higher in June, as sales of higher-priced properties bounced back stronger than lower-priced homes.
Homes priced below $500,000, which made up 48 percent of total sales in the California market in May 2020, only comprised 44 percent of all sales in June 2020. Sales of million-dollar properties, on the other hand, increased in market share to 18.1 percent in the most recent month compared with 15.6 percent in May 2020.
“A new record high in the statewide median price suggests that there is stronger housing demand from more qualified, affluent buyers in this extremely favorable lending environment,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “It also highlights both the affordability and supply issues created by the uneven impact of the coronavirus pandemic as the more affordable segments of the state’s housing market are recovering at a slower pace.”
Reflecting the uncertainty in market conditions, a monthly Google poll conducted by C.A.R. in early July found that 44 percent of consumers said it is a good time to sell, up from 40 percent a month ago, but down from 49 percent a year ago. Meanwhile, low interest rates continue to fuel the optimism for homebuying; 31 percent of the consumers who responded to the poll believed that now is a good time to buy a home, sharply higher than last year, when 23 percent said it was a good time to buy a home.
Other key points from C.A.R.’s June 2020 resale housing report include:
- At the regional level, all major regions declined in sales from last year with Southern California dropping the most at -12.2 percent, while the Central Valley had the smallest dip of only -1.5 percent.
- Slightly more than half of all counties – 26 of 51 – tracked by C.A.R. experienced a year-over-year loss in closed sales, with Mono declining the most from last year at -40.0 percent, followed by Napa (-28.2%), and Orange (-20.4%). Counties with a sales decline from last year averaged a loss of 12.5 percent from the year before. Of all the counties with a gain in sales, Glenn had the biggest increase from last year, growing 23.5 percent on a year-over-year basis from last June.
- Median prices increased in all regions in June, with the more affordable markets increasing year-over-year in the high-single digits. The Bay Area and the Central Coast regions, which experienced a dip in price in May, bounced back in June with a moderate increase of 4.2 percent and 5.4 percent, respectively.
- Meanwhile, median prices in the Central Valley and the Southern California continued to rise from last year by 7.4 percent and 3.3 percent, respectively, as pent-up demand returned to the market.
- Forty-three of the 51 counties tracked by C.A.R. reported a year-over-year gain in price in May, with Lake growing the most at 19.4 percent. Of the eight counties that experienced a price drop from last June, Del Norte had the biggest decline of 31.5 percent.
- Housing supply continued to trend downward on a year-over-year basis, with active listings falling more than 25 percent for the seventh consecutive month. A sizable year-over-year drop in active listings of 43 percent, coupled with a robust gain in closed sales, led to a decline in C.A.R.’s Unsold Inventory Index (UII) in June. The Index dropped to 2.7 months in June from 4.3 months in May and was down from 3.4 months in June 2019. The index indicates the number of months it would take to sell the supply of homes on the market at the current rate of sales.
- Housing supply continued to decline significantly across the state, with all areas falling more than 30 percent in active listings from last year. Southern California had the biggest drop in supply, with for-sale properties plunging 47.3 percent year-over-year. While all counties in the region dropped at least 40 percent from a year ago, both Riverside and San Bernardino plummeted more than 50 percent in active listings.
- Despite a more modest decline in supply in the region when compared to other areas, eight of the San Francisco Bay Area’s nine counties still experienced an annual drop in active listings. Seven of them, in fact, declined more than 23 percent from the prior year.San Francisco was the only county in the region with an increase in active listings.
- The median number of days it took to sell a California single-family home was unchanged from a year ago at 19 days in June.
- C.A.R.’s statewide sales-price-to-list-price ratio* was 99.5 percent in June 2020, up slightly from 99.2 in June 2019.
- The statewide average price per square foot** for an existing single-family home was $293 in June 2020 and $291 in June 2019.
- The 30-year, fixed-mortgage interest rate averaged 3.16 percent in June, down from 3.80 percent in June 2019, according to Freddie Mac. The five-year, adjustable mortgage interest rate was an average of 3.09 percent, compared to 3.48 percent in June 2019.
June 18, 2020
Mortgage applications to purchase a home rose 4% last week from the previous week and were a remarkable 21% higher than one year ago, according to the Mortgage Bankers Association’s seasonally adjusted index. That was the ninth consecutive week of gains and the highest volume in more than 11 years.
“The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence,” said MBA economist Joel Kan.
Buyers were also fueled by a new record low mortgage rate. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.30% from 3.38%, with points decreasing to 0.29 from 0.30 (including the origination fee) for loans with a 20% down payment.
Lower rates also fueled refinance demand. Those applications rose 10% for the week and were 106% higher than a year ago. Refinances had been slipping for weeks, but the new record low rates may have woken some homeowners up to the potential savings.
“Refinancing continues to support households’ finances, as homeowners who refinance are able to gain savings on their monthly mortgage payments in a still-uncertain period of the economic recovery,” Kan said.
The refinance share of mortgage activity increased to 63.2% of total applications from 61.3% the previous week. With fixed interest rates so low, the adjustable-rate mortgage share of activity decreased to just 2.8% of total applications. ARM loans carry lower rates but higher risk.