Real Property Report – California, June 2015

California Home Sales and Median Prices Jump in June

Median Home Prices Up 2.5 Percent to $415,000

Sales Gain 8.5 Percent

CALIFORNIA, JULY 15, 2015 — California single-family home and condominium sales gained 8.5 percent to 41,539 in June from 38,143 in May. On a year-over-year basis, sales were up 16.4 percent from 35,681 in June 2014. Driving the increase in sales was the 19.9 percent year-over-year increase in non-distressed property sales. Of note to investors, distressed property sales volume has remained nearly unchanged for 18 months and continues to remain a source of opportunity.

“After a mediocre May, California real estate sales took off in June,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “ The year-over-year jump was the largest since October 2012 likely due to improving economic conditions and fear of rising interest rates this fall.”

The median price of a California home in June was $415,000, the highest since November 2007 . The median price was up $10,000, or 2.5 percent, from $405,000 in May. Within California’s 26 largest counties, 19 counties saw median price increases while 7 experienced price decreases. The counties with the biggest median price increases were San Joaquin (+8.5 percent), San Diego (+5.7 percent) and Ventura (+5.5 percent).

On a year-over-year basis, the median price of a California home was up 5.1 percent from $395,000 dollars in June 2014. At the county level, year-over-year median price increases exceeded 5 percent in 18 of California’s 26 largest counties and 7 of those experienced double-digit price increases. The counties with the largest price increases were San Mateo (+20.0 percent), San Francisco (+14.7 percent), Sonoma (+11.5 percent) and Solano (+11.3 percent).

“The jump in June median prices surprised us,” said Schnapp. “Despite affordability issues, strong sales in June pushed median prices higher.”

Flip sales have been steadily increasing since January 2015, up 2.0% for the month and 1.3% over the past 12 months. More importantly flip says have increased 43.4% since the beginning of the year. Short sales also posted strong gains in June, up 5.7% for the month and 2.2% year-over-year. Short sales have increased 52.8% since January 2015.

“ Flippers and short sellers are finding plenty of willing buyers ,” said Schnapp. “With prices already high and moving higher, this market leaves room for investors to jump in and an attractive time to sell.”

In other California housing news:

• Cash sales, at their second highest level since May 2014, were up 3.1 percent for the month and up 1.5 percent in the past twelve months. Cash sales totaled 8,397 in June and represented 20.3 percent of total sales. Cash sales as a percentage of total sales remain high but have been steadily declining since reaching a peak of 40.0 percent of total sales in August 2011. Since then, cash sales are down 42.6 percent.
• Foreclosure notices and sales reached their lowest levels in our records dating back to January 2007 . Notices of Default and Notices of Trustee sale fell for a second consecutive month in June, down 11.4 and 10.4 percent for the month, respectively. Foreclosure sales fell 7.8 percent for the month and are down 16.9 percent year-over-year.
• The number of homeowners in a negative equity position continued downward in June thanks to rising prices . In June approximately 7.7 percent of homeowners, or 670,000, owed more than their home was worth, down 1.5 percent for the month and 39.0 percent from June 2014. We started 2015 with just over one million California homeowners underwater.
• June Institutional Investor LLC and LP purchases totaled 1,320, down 2.4 percent for the month but up 1.3 percent from June 2014. Since reaching a peak in December 2012, institutional investor demand has declined due to the lower return on investment and dwindling supply of distressed properties for sale. Seasonality notwithstanding, since April 2014 monthly purchases have remained more or less constant at 1,350. Similarly, Trustee Sale purchases by LLC and LPs were down 82.9 percent from their October 2012 peak but have trended mostly sideways since May 2014.