California's housing market started the new year with a decline in home sales and prices from the previous month and year. REALTOR® officials attribute the market's slower pace to tight inventory and low housing affordability, especially in the San Francisco Bay Area.
The California Association of REALTORS® (C.A.R.) sales and price report for January 2015 indicates closed escrow sales of existing, single-family detached homes in in the state totaled a 351,890 units last month, down 3.9 percent from a revised 366,130 in December and down 2.7 percent from a revised 361,790 in January 2014. Home sales have been below the 400,000 level since November 2013.
"Despite a leveling off of home prices and continued decline in interest rates in recent months, California's housing market continues to be constrained by low housing affordability, particularly in the San Francisco Bay Area," said C.A.R. President Chris Kutzkey.
The median price of an existing, single-family detached California home fell 5.9 percent from December's median price of $453,780 to $426,790 in January, but was up 3.4 percent from the revised $412,820 recorded in January 2014. The statewide median home price has been higher on a year-over-year basis for more than two years, but price gains have narrowed significantly in the past year.
C.A.R. reports housing inventory loosened throughout much of the state in January, though the San Francisco Bay Area continued to be hamstrung by tight inventory. Kutzkey said due to the region's strong income and job growth, the Bay Area was the least affected by the housing crisis, but strong housing demand and tight supply in the region also have caused home prices to appreciate at a faster rate than many regions in California, leading to a slide in housing affordability in the area.
MLSListings Inc., the multiple listing service of the five Silicon Valley counties of San Mateo, Santa Clara, Santa Cruz, San Benito and Monterey, reports a slight jump in inventory in all five counties, though not enough to keep up with demand. Santa Clara County's year-over-year inventory for single-family homes jumped 34 percent, while San Mateo County's inventory rose 3 percent. Both counties saw a month-over-month inventory increase of 13 percent.
The rise in housing inventory is a good sign, but the region still lacks affordable homes for sale, according to Chris Isaacson, president of the Silicon Valley Association of REALTORS® (SILVAR). "The high home prices is providing an incentive for more sellers to get into the market. The increase in inventory, in turn, is good news for buyers, as many have postponed their home search due to the lack of inventory and resulting high prices," said Isaacson. "But unless we get more affordable homes in the region, housing will continue to be more expensive in the Bay Area."
Information from MLSListings shows the January 2015 median sales price for a single-family home in Santa Clara County at $824,440, a drop of just 3 percent from the December 2014 median of $848,475 and 13 percent higher than the January 2014 median of $730,000. In San Mateo County, the January median sales price of $975,000 also declined 3 percent from the previous month's median of $977,500 and was 2 percent lower than the median of $992,500 in January last year.
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 email or call the SILVAR office at (408) 200-0100.