A leading indicator of the future direction of California's housing sector points to a lackluster market unless major changes take place in lending, jobs and the economy as a whole.
A California Association of REALTORS® (C.A.R.) report released on Tuesday revealed the Pending Home Sales Index was 117 in July, down from June's index of 119. The pending home sales index is based on contracts signed, though the transactions have not closed. The sale usually is finalized within one or two months of signing.
The pending sales report follows C.A.R.'s July sales and price report which indicated July's closed escrow sales of existing, single-family detached homes were down 4 percent from June, though up 4.5 percent from units sold in July 2010. The statewide median price of an existing, single-family detached home sold in California dipped 0.3 percent in July to $294,230 from a revised $295,210 in June. July's median price was down 7.6 percent from the $318,550 recorded in July 2010.
REALTOR® officials say they are not surprised at the data given present economic conditions. "Economic uncertainty and recent developments in financial markets have caused hesitation among buyers, the effects of which we may see in the coming months. We must see sustained job and income gains along with an increase in consumer confidence before we can expect to see consistent improvement in the housing market," said C.A.R. chief economist Leslie Appleton-Young.
According to MLSListings Inc., the multiple listing service of the Silicon Valley Association of REALTORS® (SILVAR), there were 2,431 single-family home sales under contract in Santa Clara County in July. This was down from 2,502 in June and from 2,589 last year.
Silicon Valley REALTORS® are optimistic, despite the recent reports. They point to location and momentum in the tech industry as major reasons the region's housing market is performing better than other parts of the state. At a recent SILVAR district meeting, Ethel Green, a REALTOR® with Intero Real Estate Services, said, "We are fortunate because there is no more land here. If you are here for a long time, you will get equity in your house because there is just no more land in this area."
According to SILVAR president Gene Lentz, demand for homes is not a problem in the region and it is tight credit that is hampering sales. "Mortgage applications of many creditworthy buyers are being denied because lenders have gone to the extreme with their severely tight credit requirements," said Lentz.
Lentz added that REALTORS® are also concerned that barring Congressional action, the expiration of current conforming loan limits on September 30 will make it be more difficult and more expensive for those who live in the region to purchase a home.
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.