California pending home sales continued their momentum in July, posting increases from both the previous month and year. The rise in pending sales should translate into an increase in closed transactions in the fall, according to the California Association of Realtors. Meanwhile, Realtors responding to the state Realtor group's July Market Pulse Survey are seeing fewer buyers overbidding on homes, which could be a sign that competition in California's housing market is slightly cooling.
Statewide pending home sales in July increased 3.5 percent from the Pending Home Sales Index of 118.4 in July 2015 to 122.5 in July 2016, based on signed contracts. On a month-to-month basis, pending home sales were up 3 percent from June's index of 119.0.
Southern California led the market with a year-over-year increase in pending home sales. The San Francisco Bay Area, however, reversed its gain last month with pending sales down 3.5 percent from July 2015 and down 3.8 percent from June.
California Realtors responding to the statewide Realtor July Market Pulse Survey reported the share of homes selling above asking price in July dropped to 34 percent, unchanged from a year ago. Conversely, the share of properties selling below asking price slipped to 36 percent from 43 percent in July 2015. The remaining 30 percent sold at asking price, up from 24 percent in July 2015.
For homes that sold above asking price, the premium paid over asking price fell to 7.8 percent, down from 11 percent in June and 11 percent from a year ago. Homes that sold below asking price sold for an average of 14 percent below asking price in July, which was up from 11 percent in June and 9.6 percent a year ago.
More than six in 10 properties (66 percent) for sale received multiple offers in July, down from 72 percent in June and 67 percent in July 2015, indicating a slight cooling in market competition. The average number of offers per property dipped slightly to 2.8 in July, compared with 3.0 in June and 3.0 in July 2015. Forty-four percent of properties received three or more offers in July, down from 47 percent in June.
Additionally, more than one in four (26 percent) properties had price reductions in July, up from 23 percent in June. Twenty-eight percent of properties had price reductions in July 2015.
The rental market may soon follow the trend. Moise Nahouraii, broker and owner of Referral Realty in Cupertino, recently provided Silicon Valley Realtors information from local management companies indicating rents in Santa Clara County have skyrocketed since 2013, rising between 20 to 30 percent. An 800-900 sq. ft. 2-bedroom/1-bath apartment that rented between $1,400 and $2,000 a month in 2013, today rents for $2,000-$2,500 a month. Studio apartments that rented for $800-$1,000 three years ago, now rent for $1,200-$1,500.
Nahouraii, who is chair of the Silicon Valley Association of Realtors broker/manager committee, anticipates rents stabilizing because of high competition due to completed new apartment constructions, offering lifestyle living with lots of incentives, including free rents and low or no deposits.
"Rental rates have peaked and they have started trending down," observed Nahouraii.
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.