Even though number of sales is down from last year, the homes that are being sold are actually selling faster. There is plenty of demand and fierce competition, due to low interest rates. High demand and low supply is also keeping home prices up. The average days on market is now 22 nationwide, down from 25 this time last year. Some cities in California are seeing significant decreases, such as San Diego with a whopping 10-day decline, from 25 days last year to 15 days.
It’s not going to stay that way for long, though. New listings are trending upward, which may feel like the beginnings of a recovery, but it’s more complicated than that. If supply starts to outpace demand, high house prices are not going to be sustainable. Sellers will be forced to either accept a lower price or wait for a better time. With many buyers still not having recovered from the economic chaos of COVID-19, it will be some time before demand can catch up to increasing supply. Recovery won’t truly start until California reaches the bottom, projected to be in 2022.
Photo by chuttersnap on Unsplash
Two months after reopening, the California economy is recovering unevenly, but recovering nonetheless. The housing market is a strong leader in the recovery process, with low interest rates contributing to a surge in activity after the last two months’ lull. The recovery will take time, though. The UCLA Anderson Forecast predicts a GDP decline of 42% in this quarter before easing back up 11% and then 7.6% in the next two quarters of this year. The total change from last year is expected to be a decline of 8.6%.
May was probably the trough for home sales, and they will pick up in the coming months. The extension of the foreclosure and eviction moratorium coupled with all-time low interest rates should allow buyers to regain their bearings quickly, and thus demand hasn’t suffered. Low supply and and a smaller than expected decrease in unemployment claims could point to a slower pace, but shouldn’t prevent recovery.
Call or email us if you want more information or are ready to buy or sell. Also, if you live in the South Bay or are interested in data about the area, stay tuned for a special South Bay update in early July.
Photo by Eric Rothermel on Unsplash
The California Association of Realtors (CAR) released their May sales and price report on June 16th, and the numbers are showing a definite slowdown. Existing single family home sales totalled 238,740 in May, down 13.9% from April and down 41.4% from last May. The median home price was $588,070, a drop of 3% from April and 3.7% from last year. May also saw a year-to-date statewide home sale decrease of 12.9%. The Bay Area seems to have been hit the hardest. The impact of the COVID-19 pandemic was California home sales falling to the lowest level since the Great Depression.
The good news is that May was probably the worst of it. The market shows signs of recovering, especially buyer demand shooting up from record lows. One county, Del Norte, even reported a year-over-year increase in sales, and 31 reported a year-over-year increase in prices. Interest rates are also down from last year.
Interested in data for your area? You can find the full table of statistics at https://www.car.org/aboutus/mediacenter/newsreleases/2020releases/may2020sales, and you can also call or email us for more information.
Photo by Adeolu Eletu on Unsplash