Real Property Report - California, April 2016

Tug-of-War Between Low Inventory and Affordability Rages On

April Sales Down 8.3 Percent Year-over-Year, Lowest April  Since '08

Median Home Price Jumps 6.8 Percent Year-over-Year to $432,500

CALIFORNIA, MAY 18, 2016 – California single-family home and condominium sales were 35,978 in April 2016, an increase of 5.8 percent from a revised 34,002 in March 2016. On a year ago basis, sales were down 8.3 percent from 39,219 in April 2015, the lowest April sales volume since 2008.

Year-to-date sales (January through April 2016) totaled 117,235, down 4.5 percent from the same time period in 2015, and was the second-lowest January through April sales volume since 2008.

Of the total number of homes sold in April 2016, 20.0 percent were condominiums and 80.0 percent were single-family residences.

“We are well into the spring selling season and sales volumes are still near their lowest levels since 2008,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “The lack of inventory means the tug-of-war between inventory and price will likely continue for the foreseeable future. While authorized building permits in California are approaching the highest levels since 2007, new inventory of any volume won’t arrive until 2017 or 2018.”

The April 2016 median price of a California home was $432,500, up 5.5 percent from a revised $410,000 in March 2016. On a year-ago basis, median home prices were up 6.8 percent from $405,000 in April 2015. The median price of a condominium was $413,000, up 2.0 percent from $405,000 in March 2016 and up 6.4 percent from $388,000 a year ago.

“Prices jumped this past month as seasonal pent-up demand slammed head-on into an inventory constrained market,” said Schnapp. “Although California is still finding buyers, there’s no question that at some point, and perhaps happening now, buyers are going to put their hands up and sit tight or even consider out-of-state options.”

Within the 26 largest California counties, the highest year-over-year price appreciation occurred in the Northern California counties of Santa Clara (16.3 percent), Merced (13.9 percent), Sonoma (13.7 percent), Monterey (13.4 percent), Alameda (11.6 percent), and Marin (11.1 percent).

Cash sales of single-family homes and condominiums in April 2016 gained 0.3 percent from March 2016 but were down 11.0 percent from April 2015. April cash sales were 21.0 percent of total sales, in line with the average percentage of cash sales over the past 12 months. Within the 26 largest counties in California, the counties with the highest percentage of cash sales were Santa Cruz (29.8 percent), Monterey (26.8 percent), Marin (26.7 percent), San Francisco (26.3 percent), and Fresno (25.1 percent).

“Despite low inventory and high prices, cash sales continue to be an integral part of the market,” said Schnapp. “The lure of a positive return on investment in a yield-starved environment has proven attractive to investors looking to deploy cash in real estate.”

In other California housing news:

• Negative Equity - The number of homeowners in a negative equity position fell this past month as prices rose. Currently, the number of negative equity households is slightly more than 540,000. Since April 2015, approximately 250,000, or 33 percent of negative equity California homeowners have exited their underwater positions.
• Flip Sales - Flip sales in April 2016 fell 13.9 percent for the month and were down 7.6 percent over the past 12 months. Flip sales accounted for 3.0% of total sales, the lowest since April 2015.
• Institutional Investor Purchases by LLC and LPs fell 1.1 percent in April 2016. It appears that investor purchases are trending about 5 to 10 percent lower this year relative to last year. On a year-ago basis, purchases were down 7.7 percent from April 2015.
• Trustee Sale purchases by LLC and LPs fell 0.9 percent for the month and were down 7.8 from a year ago. Despite recent minor ups and downs, over a longer period of time, Trustee sale purchases have been trending mostly sideways since November 2013.
• Institutional Investor sales by LLC and LPs Institutional Investor sales by LLC and LPs fell 4.4 percent for the month and were down 14.8 percent from April 2015. Despite recent volatility, investor sales have been on a steady downward trend since reaching an interim peak in December 2012.
• Foreclosure Notices and Sales. Foreclosure Notices of Default (NODs) fell 15.2 percent from March 2016. NODs reached an interim low in November 2015 and then from November to March 2016, NODs gained 32.3 percent. In April NODs gave back half of that gain. Over a longer period of time, NODs have been unchanged since May 2015.
• Notices of Trustee Sale fell 7.9 percent from March to April but have trended mostly sideways since June 2015. In general, both Notices of Default and Notices of Trustee Sale are near their lowest levels in our records dating back to January 2007.
• Foreclosure sales retreated 6.2 percent for the month, and are down 34.7 percent in the past 12 months. Foreclosure sales have been drifting steadily lower since May 2013.

Home Sales

Home Sales - Single-family residence and condominium sales by month from 2007 to current divided into distressed and non-distressed sales. Distressed sales are the sum of short sales, where the home is sold for less than the amount owed, and REO sales, where banks resell homes that they took ownership of after foreclosure. All other sales are considered non-distressed.

Year-over-Year Home Sales

Year-over-Year Home Sales Year-over-Year Home Sales - Single-family residences and condominiums sold during the same month for the current year and prior years divided into distressed and non-distressed sales.

Median Sales Prices vs. Sales Volume

Median Sales Price vs. Sales Volume - Median sales price (left axis) of a California single family home versus sales volume (right axis), by month from 2012 to current. Median sales prices are divided into three categories: All single-family homes (black line), distressed properties (red line), and non-distressed properties (blue line). Monthly sales volumes (right axis) are illustrated as gray and lavender bars. The gray bars are distressed sales and the lavender bars are non-distressed sales.

California Homeowner Equity

California Home Owner Equity - A model estimate of California homeowners segregated into various categories of levels of homeowner equity for a given month. Homeowner numbers represent a percentage of total California homeowners.

Cash Sales

Cash Sales - The blue bars (right axis) illustrate cash sales of single-family residences and condominiums by month. The red line (left axis) illustrates cash sales as a percentage of total sales by month.

Flipping

Flipping – The number of single-family residences and condominiums resold within six months.

Market Purchases by LLCs and LPs

Market Purchases by LLCs and LPs - The blue bars (right axis) illustrate market purchases of single-family residences and condominiums by LLCs and LPs from 2007 to current. The red line graph (left axis) illustrates LLC and LP purchases as a percentage of total sales by month.

Market Sales by LLCs and LPs

Market Sales by LLCs and LPs - The blue bars (right axis) illustrate market sales by LLCs and LPs of single-family residences and condominiums by month. The red line graph (left axis) illustrates sales as a percentage of total sales by month.

Trustee Sale Purchases by LLCs and LPs

Trustee Sale Purchases by LLCs and LPs - The blue bars (right axis) illustrate trustee sale purchases (foreclosure sales) of single-family residences and condominiums by LLCs and LPs from 2007 to current. The red line graph (left axis) illustrates purchases as a percentage of total trustee sales by month.

Foreclosure Notices and Sales

Foreclosure Notices and Sales - Properties that have received foreclosure notices — Notice of Default (green) or Notice of Trustee Sale (blue) — or have been sold at a foreclosure auction (red) by month.

Foreclosure Inventories

Foreclosure Inventory - Preforeclosure inventory estimates the number of properties that have had a Notice of Default filed against them but have not been Scheduled for Sale, by month. Scheduled for Sale inventory represents properties that have had a Notice of Trustee Sale filed but have not yet been sold or had the sale cancelled, by month. Bank-Owned (REO) inventory means properties sold Back to the Bank at the trustee sale and the bank has not resold to another party, by month.

Real Property Report Methodology

California real estate data presented by PropertyRadar, including analysis, charts and graphs, is based upon public county records and daily trustee sale (foreclosure auction) results. Items are reported as of the date the event occurred or was recorded with the California County. If a county has not reported complete data by the publication date, we may estimate the missing data, though only if the missing data is believed to be 10 percent or less.