The lowest mortgage interest rates in nearly three years helped spur California's housing market in July, recording the first year-over-year sales gain and highest sales level since April 2018. Sales increased from a year ago in all major regions, except the San Francisco Bay Area, which experienced a slight decline.
Closed escrow sales of single-family homes in the state totaled 411,630 units in July, up 5.6 percent from the 389,730 level in June. Homes sales were up 1.1 percent from 407,030 units in July 2018.
"Mortgage rates that dipped to the lowest level in nearly three years has helped reduce monthly mortgage payments for the past five consecutive months, giving buyers more purchasing power," said C.A.R. President Jared Martin.
According to Freddie Mac, the 30-year, fixed-mortgage interest rate averaged 3.77 percent in July, down from 4.53 percent in July 2018. The five-year, adjustable mortgage interest rate was an average of 3.47 percent, compared to 3.84 percent in July 2018.
The statewide median price pulled back from June's $610,720, but was still higher than the previous year. July's median price was $607,990, down 0.4 percent from June and up 2.8 percent from $591,230 in July 2018, marking the fourth straight month that the median price remained above $600,000.
"While it's encouraging that home sales crept higher in July, the market will continue to be challenged by an overarching affordability issue, especially in high cost areas such as the Bay Area, which requires a minimum annual income well into the six figures to purchase a home," said C.A.R. senior vice president and chief economist Leslie Appleton-Young.
In the Bay Area, Alameda County recorded the largest drop in sales from a year ago at 10.5 percent, followed by Contra Costa County, down 5 percent, and San Mateo County, down 3 percent. Marin, San Francisco and Sonoma counties posted double-digit sales gains from a year ago.
Sales in Napa, Solano and Santa Clara counties grew in the single digits, with Santa Clara showing a sales gain of 3.9 percent from a year ago and from the previous month. Meanwhile, the July median for a single-family home in Santa Clara County was $1,298,000, a drop of 3.9 percent from $1,350,000 in June 2019 and from the $1,351,000 median in July 2018.
"Sellers are listening to their Realtor and being more realistic in pricing their home, as evidenced by the average price drop and sales gains, but there's no question that home prices are still way higher than what many people can afford, even with low mortgage interest rates," said Alan Barbic, president of the Silicon Valley Association of Realtors.
MLSListings reports the percent of list price received is still showing an average above 100 percent of list price in Santa Clara (101%) and San Mateo (105%) counties, while in Santa Cruz, Monterey and San Benito counties the average is below 100 percent, meaning sellers are willing to take less than asking. The report states this could be a sign that more negotiating power is moving to the hands of buyers.
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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