According to Pro perty Radar’s Real Property Report – California for July 2014, “California single-family home and condominium sales gained 3.9 percent in July 2014 but were down 9.2 percent from July 2013. Year-to-date sales for the first seven months of the year are the lowest since 2008.”
This report finds the overall decline in sales is due to the decline in affordability due to rapid price increases, the rise in mortgage interest rates, lack of affordable inventory, and the rapid decline in distressed property sales. Further the number of distress property sales showed a significant decline from July 2013 (25.6 percent of sales) to July 2014 (17.0 percent of the total).
“Lackluster sales volumes so far this year should come as no surprise given the fact that in many California counties houses have simply become unaffordable,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “The decline in affordability in concert with the rapid decline in lower priced distressed properties for sale has exacted a toll on demand.”
The July 2014 median price of a California home edged up 1,100 dollars, or 0.3 percent, to 390,100 dollars, the slowest monthly increase since January 2014. On a year-ago basis, median home prices gained 7.8 percent. Driving the month-over-month price increase in July was the 4.4 percent increase in the sales volume of higher priced non-distressed properties, which accounted for 83.0 percent of total sales. The median price of non-distressed homes was up only 0.2 percent over last year, indicating the gain in median prices was due mostly to a shift from less expensive to more expensive homes.
As the summer selling season winds down, median price increases have slowed or peaked in many of California’s largest counties. In July 13 of California’s 26 largest counties experienced monthly price declines compared to only six in April.