California house prices up 28 months in a row

San Francisco, California Photo: Thomas Hawk

The statewide median price of an existing, single-family detached home climbed 6.6 per cent in June 2014 compared to June 2013, according to the California Association of Realtors. The average value of $457,160 was down 2 per cent from May’s median price of $466,320, though, while the annual growth was the smallest figure in more than two years, both of which have been taken as a sign by Realtors that the market is now stabilising.

“Home prices are finally increasing at a healthier pace, and the smallest year-over-year price gain in more than two years suggests that prices are stabilizing,” says C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “Last year’s frenzied market of multiple offers, which drove sales prices above listing prices, has tapered off as the sales-to-list price ratio has dropped to a more normal level at nearly 99 percent, which signals a return to a more balanced market.”

Diminished home affordability remains a challenge for buyers, particularly in high cost areas of the state, but sales are now being boosted by low interest rates.

Closed sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized, the eighth straight month that sales were below the 400,000 level and the 11th straight decline on a year-over-year basis. But sales in June increased 1.5 per cent from a revised 389,060 in May. The statewide sales figure represents what would be the total number of homes sold during 2014 if sales maintained the June pace throughout the year.  It is adjusted to account for seasonal factors that typically influence home sales.

“While June home sales rose at the statewide level, the market is still constrained by tight supply and low housing affordability in areas of high demand, where job growth is robust and international buyers have a strong presence,” adds C.A.R. President Kevin Brown. “Overall, however, with inventory improving and home sales slowly moving back up, the market is more balanced, and we could see further market normalization in the upcoming months as interest rates remain at the lowest levels we’ve seen so far this year.”