Home sales increased 1.2 percent in May in California compared with the same period a year ago, but the median price of an existing home rose 23.2 percent, according to the California Association of REALTORS®.
"Home sales posted their third largest increase on record for May, due in part to first-time home buyers who timed the open and close of escrow in order to capitalize on both the federal and state tax credits," said the state trade association's president Steve Goddard.
Closed escrow sales of existing, single-family detached homes in California totaled 552,800 in May, according to information collected by the state trade association from more than 90 local REALTOR® associations statewide. Statewide home resale activity increased 1.2 percent from the revised 546,490 sales pace recorded in May 2009 and up 14.1 percent from the previous month.
On the other hand, the median price of an existing, single-family detached home in California in May was $324,430, a 23.2 percent increase from $263,440 median for May 2009, and up 5.9 percent compared with April's $306,230 median price. The May median price marked the fifth month of double-digit gains in the median price, indicating a "strong buyer demand relative to the supply of homes for sale," according to Goddard.
"We expected home sales to drag a bit as the federal tax credit deadline passed, but withtax credits still in place for Californians and record low mortgage rates, we are seeing a shift to more sales in the mid- to high-end market, which in turn has pushed the median price up in many areas like Silicon Valley," said Jeff Bell, president of the Silicon Valley Association of REALTORS®.
The California Association of REALTORS® reports the Silicon Valley neighborhoods of Los Altos, Saratoga, Palo Alto and Los Gatos were among the top 10 cities statewide with the highest median price in May. Los Altos' May median price was $1,500,000; Saratoga, $1,435,500; Palo Alto, $1,293,500; and Los Gatos, $1,087,500. Los Gatos experienced a median home price increase of 41 percent, ranking among the top 10 cities statewide with the greatest median home price in May compared to the same period a year ago.
Bell said while inventory has steadily increased since the beginning of the year, he does not expect prices to drop by much, if at all. A new report from real estate search engine Trulia.com states the percentage of homes with price reductions declined in the beginning of June. The report found 22 percent of homes listed for sale nationwide experienced at least one price reduction as of June 1 compared with 23.6 percent in June 2009. The average discount for price-reduced homes remained unchanged at 10 percent of the original listing price. The total dollar amount slashed from home prices was $26.7 billion. Cities in the Western U.S. experienced the largest decreases in price reductions compared with the previous year. Las Vegas led the way with a 67 percent decrease in price reductions and six California cities (Oakland, San Jose, Los Angeles, Sacramento, San Francisco, and San Diego) experienced a 24 percent or more decline in price reductions.
Bell said sellers, as well as buyers, are optimistic of the summer season. "With interest rates still at record low levels and prices reasonable, homes priced right will sell, some even with multiple offers, as we've already seen," Bell said.
Bell added home prices in Santa Clara County bottomed in February of 2009 and have risen a whopping 41.6 percent. The county's May median of $630,000 is 27.5 percent of its peak price of $868,410 in April 2007.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.