Market Updates

News from CAR: 2011 First Quarter Housing Market Report

June 6, 2011

A May update from the CALIFORNIA ASSOCIATION OF REALTORS®(CAR) shows that as the economy continued to improve slowly and mortgage rates remained at historically low levels, first quarter home sales activity in California was on par with the first quarter of last year when tax credits prompted housing demand to increase. Sales of existing single-family homes totaled a seasonally adjusted annualized rate of 519,870 in the first quarter of 2011, an increase of 6.7% from the fourth quarter of last year, and virtually unchanged from the first quarter of 2010 after declining consecutively for four quarters on a year-to-year basis. The statewide median price of $278,430 in the first quarter of 2011 was the lowest since the second quarter of 2009, as deeply-discounted distressed sales continued to make up more than half of all sales throughout the state. The median price declined for the third straight quarter, but remained 12.4% higher than the cyclical low of $247,630 reached in the first quarter of 2009.
Sales growth in the Bay Area was slightly stronger than that of the state. Sales of existing detached homes in the Bay Area increased 1.7% year-to-year in the first quarter of 2011, slightly higher than the growth rate of the state.
Lower-priced counties in the Bay Area experienced a larger boost in sales from the tax credits in the first quarter of last year compared to the state as a whole. Moreover, economic conditions have stabilized throughout the state, but recovery in these county economies has lagged with somewhat weaker sales in the first quarter of this year. As a result, the year-to-year declines in the first quarter of 2011 were somewhat larger in these counties than for the state as a whole. By contrast, most Bay Area counties received a smaller boost to sales from the tax credits last year, and were farther along the road to recovery in the first quarter of this year, so the year-to-year comparisons were somewhat better.
While state, regional, and county home sales are generally lower than one or two years ago, they remain on track to hit the levels seen in the pre-peak years of the late 1990s and early 2000s that are equivalent to the sustainable sales in the California housing market over the next few years. As for home prices, most counties will avoid a double-dip to the lows that were experienced in early 2009, but will experience softness over the coming months until improving economic conditions create more jobs and brighten consumer sentiment.
For more information or a copy of the full report, please contact an Alain Pinel Realtors sales professional.

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