Coming out of the strong summer home buying months, the housing market is showing signs of slowing, with July pending home sales falling. Realtors responding to the California Association of Realtors' July Realtor Market Pulse Survey reported fewer floor calls, listing appointments, and less open house traffic in July compared to the previous month.
Year-over-year statewide pending home sales declined 2.6 percent in July and edged down on a monthly basis for the first time since March, down 0.9 percent from June. Pending home sales have declined on an annual basis for six of the last seven months. According to the state Realtor group, after solid pending sales growth in April, May and June, continued housing inventory issues and affordability constraints may have pushed the market to a tipping point, suggesting the pace of growth will begin to slow in the fall.
"Though we are approaching the off-peak season for buying, no doubt shrinking inventory and weakening affordability are reasons for the slowdown. As the supply of homes for sale tightens, the remaining homes will become even more competitive," said Denise Welsh, president of the Silicon Valley Association of Realtors.
In fact, according to C.A.R., market competitiveness has stepped up, increasing the most in homes priced $750,000-$999,999 and $1 million-$1,999,999, which posted the largest gains in receiving three or more offers compared with last year, rising from 36 percent to 53 percent and from 38 percent to 46 percent, respectively. Listing price reductions decreased from 26 percent a year ago to 21 percent in July.
"These days it's impossible to purchase a home priced at $500,000 or less in the Bay Area. San Jose has now become the most competitive market in the country," remarked Welsh.
The San Francisco Bay Area experienced the largest drop in pending sales in July, falling 11.5 percent on an annual basis. San Francisco and San Mateo counties, two of the state's most expensive markets, were both down in double-digits by 11 percent and 21.4 percent, respectively. Santa Clara County saw pending sales fall 9.8 percent from a year ago.
Realtors report the share of homes selling above asking price edged up from 34 percent a year ago to 35 percent in July, while the share of properties selling below asking price remained flat at 36 percent. The remaining 29 percent sold at asking price, down from 30 percent in July 2016.
The housing crisis has become a state issue, said Welsh. "Going forward, as Realtors, our top concerns are declining housing affordability, inflated home prices and a likely slowdown in economic growth if our state's housing crisis is not alleviated," said Welsh. "We expect the legislature to tackle a number of housing-related bills in session now that they are back from their summer recess. They have their work cut out for them."
According to California Association of Realtors field representative Sean Bellach, there are about 3,000 bills proposed in Sacramento this year, of which 150 pertain to housing.
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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