The California Association of REALTORS®' "State of the California Housing Market 2008-2009" points to rising home sales, declining home prices, stricter loan underwriting standards, and the financial market meltdown as having contributed to a turbulent year in the state's housing market.
With annual sales in the California housing market up 12 percent to 395,600 in 2008, the report disclosed a further 12.5 percent annual increase is projected for 2009. Sales increases are largely due to distressed properties sold at mark-down prices. Nearly 20 percent of sellers sold their property due to foreclosure, short sales, or default, up six percent from last year.
"The number of sellers who sold their home with a loss almost doubled from 11.9 percent in 2007 to a record-setting 22.2 percent in 2008, well above 1.9 percent in 2006, and almost triple the long-term average of 7.7 percent," C.A.R. vice president and chief economist Leslie Appleton-Young said.
The long-term value of homeownership was demonstrated in 2008, as sellers who owned their properties for a longer period of time and did not refinance or cash out, were less likely to experience a loss from their home sale. Only three percent of sellers who owned their homes for more than five years experienced a net cash loss from their home sale, while 47 percent of sellers who owned their homes for less than three years had a net cash loss in 2008.
The median price of existing homes declined 17.8 percent to $440,000 in 2008, compared with $535,000 a year earlier. The statewide median home price is anticipated to decline to $358,000 in 2009.
Affordability appears to have improved as C.A.R.'s First-Time Buyer Housing Affordability index rose to 53 percent during the third quarter of 2008 as a result of the drop in home prices, but the report indicated the ratio of home prices to household income remained high for many first-time home buyers. More restrictive lending standards, as well as the credit crunch made it difficult for many first-time home buyers to qualify for a mortgage loan.
According to Julia Keady, 2009 president of the Silicon Valley Association of REALTORS®, the data presented in C.A.R.'s 2008-2009 housing market report "underlines the value of a home as a good long-term investment with both financial and non-financial rewards."
"While the financial gains can be significant for most owners, it's the social and personal benefits that really influence consumers to buy a home. Most people buy homes to become homeowners, to live in those homes, and to be part of the communities in which those homes are located," said Keady, who is a Realtor with Alain Pinel Realtors in Palo Alto.
Keady said 2009 will be a challenge for the state's housing market, even in Silicon Valley, which has up until now been well insulated from foreclosures and short sales experienced in other parts of the state.
"Market conditions vary by location and because there are many factors to consider in finding the right home and the right financing, it's become even more important today for consumers to work with a REALTOR® as they consider one of the most significant transactions of a lifetime," Keady said.
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.