California's housing market ended the year on a positive note, with sales at a moderate pace and home price increases in December. Despite tight housing supplies and an affordability squeeze, the housing market posted a solid performance in 2016, according to the California Association of Realtors.
Closed escrow sales of existing, single-family detached homes in California totaled 411,230 units in December, down 7 percent from the November level, and down 0.6 percent compared with home sales in December 2015. For 2016 as a whole, a preliminary 416,250 single-family homes closed escrow in California, up 1.7 percent from 2015's revised pace of 409,410.
The statewide median price of a single-family home rose 1.5 percent from a revised $501,710 in November to $509,060 in December. December's median price increased 3.9 percent from the revised $489,770 recorded in December 2015.
Realtor officials note California's housing market experienced solid price growth throughout 2016, with the median price increasing 5.4 percent for the year as a whole to reach $502,250. They are remain cautiously optimistic about housing performance in 2017.
"While we had a decent fourth quarter performance, it by no means indicates that the market will be easy in the upcoming year," said Leslie Appleton-Young, the state Realtor group's senior vice president and chief economist. "Looking ahead, we expect plenty of headwinds in 2017, including rising interest rates, scarce housing inventory, and a persistent affordability crunch, along with many uncertainties in the policy arena to challenge the housing market."
In Santa Clara County, December single-family home sales fell 16.8 percent from November. Sales were down 15.7 percent from December 2015. The median sales price of a single-family home in Santa Clara County was $965,000, down 4.5 percent from November's median of $1,010,000 and 4.9 percent above the December 2015 median of $920,000.
"The demand for homes clearly outstrips supply in Silicon Valley. Unless the supply of homes can come closer in line with demand, limited inventory and high prices will continue to define our local housing market," said Denise Welsh, president of the Silicon Valley Association of Realtors.
Welsh sees housing performance in 2017 hinging on future interest rate hikes and housing policies under the new administration. President Trump's first act upon taking office was to sign an order suspending a recently announced cut to the FHA mortgage insurance premium. The measure would have cut the cost of mortgages for millions of home buyers.
Welsh said California home buyers would be impacted more than any other state by the decision not to reduce FHA premiums. "We're still trying to understand the President's action. The National Association of Realtors estimate the reduced premium would save the average FHA borrower $500 a year in insurance costs. California home buyers would save an average of $860 a year," said Welsh.
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.
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