California's housing market continued to improve in May, with home prices posting solid gains for the third straight month and home sales well above last year's pace, according to the California Association of REALTORS®. The median price increase is attributed to the strong sales increase in the higher-priced coastal regions, particularly in the San Francisco Bay Area, where job growth is strong and the economy is growing faster than other areas of the state.
"First-time buyers are recognizing that the housing market has hit bottom and are now seeing a sense of urgency to take advantage of ultra-low interest rates and advantageous home prices. Additionally, trade-up buyers are returning to the market after sitting it out for the past few years to get in on favorable home prices," explained C.A.R. president LeFrancis Arnold.
Closed escrow sales of existing, single-family detached homes in California climbed 3.4 percent from April's revised 553,670 to 572,260 in May, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. May sales jumped 21.5 percent from the May 2011 pace, marking the highest year-over-year sales increase since May 2009.
The statewide median home price of an existing single-family home in May was $312,110. The May median was the highest since September 2010 and 6.6 percent from the median of $292,850 in May 2011.
May sales of existing single-family homes in Santa Clara County were up 20.7 percent from the previous month and up 23.5 percent from May 2011. The median sales price of an existing single-family home continues its upward trend, as well. The May median was $643,500, an increase of 7.3 percent from the median of $599,950 in May 2011.
The low inventory continues to be a critical issue statewide. California's Unsold Inventory Index for existing, single-family detached homes dropped to 3.5 months in May, down from 5.7 months in May 2011. The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate. A 7-month supply is considered normal for the state.
"The Bay Area has the greatest shortage of homes for sale, with inventory levels in the two- to three-month range for Santa Clara, San Mateo, Alameda, and Contra Costa counties," according to C.A.R. vice president and chief economist Leslie Appleton-Young.
The San Francisco Bay Area had a 2.9 month supply of homes in May, down from five months a year ago, while Santa Clara County's inventory was down to a mere two months in May, down from 3.8 months in May 2011.
The low inventory is triggering many multiple offer situations. "Multiple offers are everywhere," Mark Wong, a REALTOR® with Alain Pinel Realtors, remarked at a recent Silicon Valley Association of REALTORS®' district meeting. Wong presented examples of multiple offer situations in Palo Alto, Saratoga, Santa Clara, Cupertino and San Jose. All homes were sold above asking price. In some cases, nearly half of the offers were cash.
"It's an escalating market. There is cash everywhere," confirmed state certified appraiser Nancy Dierx, founder of Real Estate Appraisal Professionals. Comparing sales and sale prices of selected Silicon Valley neighborhoods from the last 12 months until the present time, Dierx noted sales and prices even in the lower end of the market have increased significantly.
Additionally, C.A.R. reports the median number of days it takes to sell a single-family home dropped to 46.6 days in May, down from 52 days in May 2011.
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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