Another month, another price record in September — the fourth in as many months.
The state’s median-home price — meaning half the homes sold for more, the other half for less — soared to $712,430, a 0.8% increase compared to August and up 17.6% from a year ago, according to the California Association of Realtors.
Basic economics — climbing demand and a dramatic decline in supply — was the primary reason for the largest annual increase since February 2014. Active listings plunged 48.4% in September compared to a year ago, the fourth consecutive month of 40%-plus declines vs. a year ago.
Most sales in more than a decade
Despite the challenges of finding available homes, sales reached a seasonally adjusted annualized rate of 489,950 in September, a 5.2% increase from August and up 21.2% from a year ago. Near-record-low mortgage rates are helping offset the record prices and opening the door to ownership. September’s home sales pace is the highest since February 2009.
“As motivated buyers continue to take advantage of the lowest interest rates in history, home sales will be elevated in the next couple of months, and the housing market should remain a bright spot in a broader economy that continues to struggle,” says CAR president Jeanne Radsick, a second-generation REALTOR in Bakersfield. “And with many employers allowing the flexibility of working remotely, homebuyers now also have the option of searching in less expensive areas where homes are more affordable and buyers can get more home for their money.”
Indeed, Bay Area and Los Angeles-area residents, especially those who can work remotely, are looking to the Inland Empire and the Sacramento region for lower-priced homes — and more room to roam. That’s creating a crunch for lower-priced homes, as homes priced under $1 million dropped 56% from a year ago, while those between $1 million to $3 million fell 30.4% for the same comparable period.
SEPTEMBER home sales, prices compared to a year ago by county
San Francisco: Sales up 90.2%; $1.67 million, up 8.1%
Orange County: Sales up 31.3%; $915,000, up 10.2%
Los Angeles: Sales up 16.4%; $747,380, up 12.7%
San Diego: Sales up 32.8%; $735,000, up 15.4%
Sacramento: Sales up 21.4%; $439,000, up 14.0%
Fresno: Sales up 8.7%; $325,000, up 9.8%
Source: California Association of Realtors
‘Imbalance of supply and demand could lead to more housing shortages’
But urban flight had no effect on home sales in the Bay Area, where sales soared 42% from a year ago, followed by a 34.2% increase along the Central Coast, basically Santa Barbara to Santa Cruz counties. Bay Area had five counties top the $1 million mark, with San Mateo County topping the list at $1.77 million, followed by San Francisco at $1.67 million.
“With the statewide home price hitting new highs for the past four months, it’s sounding like a broken record as California home sales and prices continue to outperform expectations,” says Leslie Appleton-Young, senior vice president and chief economist for CAR. “However, with the shortest time on market in recent memory, an alarmingly low supply of homes for sale, and the fastest price growth in six and a half years, the market’s short-term gain can also be its weakness in the longer term as the imbalance of supply and demand could lead to more housing shortages and deeper affordability issues.”
Even with record-low mortgage rates, only one of every three California households could afford to buy a house in the second quarter, compared to a modern-day record of 56% in 2012, according to CAR. And affordability is much lower in the Bay Area and in many Central California counties.