January Sales Down 23.4 Percent from December

Median Price Falls 2.6 Percent

January 2015 California single-family home and condominium sales fell 23.4 percent to 22,850 from 29,821 in December 2014. On a year-over-year basis, sales were down 6.1 percent. Regionally, year-over-year sales were down 8.4 percent across the nine Bay Area counties, 4.1 percent in Southern California, and 10.1 percent in Central California.

“Seasonal forces typically depress January sales,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “Still, January 2015 sales are the lowest January sales since 2008, despite near record low mortgage interest rates.”

The median price of a California home was 370,000 dollars in January, down 10,000 dollars, or 2.6 percent, from 380,000 dollars in December 2014. Of the 26 largest California counties, median prices fell for the month in all but 5 counties.

“Median home prices also declined from December to January,” said Schnapp. “The fall-off in prices appears to be seasonal and not necessarily indicative of a larger trend.”

In California, year-over-year, median home prices were up 22,000 dollars, or 6.3 percent, from January 2014. Regionally, year-over-year median prices rose 5.0 percent across the nine Bay Area Counties, 7.8 percent in Southern California and 3.7 percent in the Central Valley.

With the decrease in median home prices, the number of homeowners in a negative equity position increased 2.8 percent to 1,015,000, the highest level since October 2014. As a result, approximately 11.7 percent of California homeowners owed more than their home was worth, up from 11.4 percent in December. Despite the increase in January, the number of negative equity homeowners has declined more than 25 percent from a year ago.

Consistent with the overall decrease in January sales, cash, flip, and institutional investor sales posted declines in January. Foreclosure notices also edged lower.  Specifically:

• Cash sales were 5,704 in January, down 15.8 percent from December and represented 25.0 percent of total sales. Cash sales have been steadily declining since reaching a peak of 40.0 percent of total sales in August 2011. Since then, cash sales are down nearly 60.0 percent. Flip sales total 969 in December, gaining 1.9 percent for the month, but were down 36.0 percent for the year.
• Flip sales are defined as properties that have been resold within six months. Flip sales comprised 3.5 percent of total sales in December, down 0.1 percent from November. Flip sales peaked in May 2013 at 5.1 percent of total sales and have declined 49.0 percent since then. Within the 26 largest counties in California, Fresno, Solano and Sacramento had the highest percentage of flips at 5.9, 4.8 and 4.5 percent, respectively.
• Institutional Investor LLC and LP purchases in January totaled 1,078 down 3.5 percent for the month but up 1.9 percent from January 2014. Over the longer term, institutional investor demand has retreated due to the lower return on investment and dwindling supply of distressed properties for sale. Purchases are down 51.5 percent since peaking in December 2012. Similarly, Trustee Sale purchases by LLC and LPs are down 85.9 percent from their October 2012 peak.
• Foreclosure starts, Notices of Default (NODs), were down 0.9 percent from January to December and were down 22.2 percent from January 2014. The monthly decrease is in line with the longer-term downward trend. Foreclosure Sales fell 1.2 percent for the month and were down 23.3 percent for the year. Click for more Foreclosure Trends.

“While California home sales have been slowing for more than a year, the steady increase in jobs throughout much of 2014 should help,” said Schnapp. “If the job market continues to improve in 2015, we might see an increase in demand pushing both sales and prices higher this spring.”