Buyers, there’s plenty of inventory. Some sellers are willing to make deals, witness the sales price to list price ratio of 94.4% compared to the average since January 1998 of 96.3%. Remember, to find a seller willing to negotiate, you have to make offers.
Sellers, three words: Price It Right! The real estate market is very hard to generalize. It is a market made up of many micro markets. For complete information on a particular neighborhood or for an evaluation of your home’s worth, call me at 760-533-2540.
California Home Sales Fell after Four Years of Impressive Gains: C.A.R. Annual Report
After Affordability concerns continued to impact the residential real estate market in California, with the share of first-time buyers declining to their second lowest level from 30.5% in 2005 to 27.1% in 2006, according to a report released by the California Association of Realtors® (C.A.R.). Based largely on C.A.R.’s 26th Annual Housing Market Survey, “The State of the California Housing Market” examined trends in buyer and seller behavior during 2006, a transition year in which statewide sales of existing single-family homes decreased 23%, while price appreciation slowed dramatically as the year progressed.
The C.A.R. survey also found that the share of buyers who used a second mortgage climbed from 38% in 2005 to 43% in 2006, more than triple the percentage since 2001 and the highest percentage since 1982. The use of alternative loan products also registered a sharp increase.
“Home buyers with zero-down payments increased significantly from 4.5 percent in 2000 to 21.1 percent in 2006,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Two out of five first-time buyers made a zero-down payment on their home purchase, while just one in 10 repeat buyers purchased their home with no down payment.
“The interest rate environment also played a significant role in the housing market of the past few years,” she said. “From 2002 through the first half of 2005, interest rates were either expected to fall or remain at attractive levels. When the fixed-rate temporarily exceeded 6 percent in 2003 and 2004, sales slowed. But in each case, market activity accelerated when the rate fell below that threshold. By contrast, when the fixed-rate moved past 6 percent in late 2005, it remained there. Expectations adjusted and anticipated further rate increases, contributing to the slowdown in sales in late 2005 and into 2006.”
Home sales in California fell in 2006 after four years of expansion. Sales in the Bay Area housing market fell at a slightly lower rate than for the state as a whole. After peaking in 2004, Bay Area sales declined 10% in 2005 and then 19% in 2006. The median price in the Bay Area-the highest of any region in the state-continued to increase by small single-digit increments throughout 2006, in part because of inventories that were well below the statewide levels.
Home sales in the Southern California region followed the general direction of the state, declining 23% from the record level of 2005. Inventory levels in this part of the state nearly tripled from a year ago, to levels in the range of their long-run average. The Central Valley had the largest decline in sales activity among the three regions in California.
“The statewide median price saw shrinking gains throughout the year, slowing from a 14 percent year-to-year increase in January 2006 to just under two percent as the year drew to a close,” said C.A.R. President Colleen Badagliacco. “That’s a far cry from the string of double-digit annual percentage gains that prevailed during the first half of this decade.
“Over the period 2003 through 2005, inventories were lean, multiple offers were common, and buyers and sellers alike knew they needed to move quickly to consummate a transaction,” she said. “But as the market began to slow in late 2005, buyers sensed that they would get a better deal if they waited, while sellers still hoped to sell their home at a premium. This drove a wedge between buyer psychology and seller psychology, creating more market friction and leading to a slowdown in activity.”
The C.A.R. survey also found that the share of buyers who used a second mortgage climbed from 38% in 2005 to 43% in 2006, more than triple the percentage since 2001 and the highest percentage since 1982. The use of alternative loan products also registered a sharp increase.
“Home buyers with zero-down payments increased significantly from 4.5 percent in 2000 to 21.1 percent in 2006,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Two out of five first-time buyers made a zero-down payment on their home purchase, while just one in 10 repeat buyers purchased their home with no down payment.
“The interest rate environment also played a significant role in the housing market of the past few years,” she said. “From 2002 through the first half of 2005, interest rates were either expected to fall or remain at attractive levels. When the fixed-rate temporarily exceeded 6 percent in 2003 and 2004, sales slowed. But in each case, market activity accelerated when the rate fell below that threshold. By contrast, when the fixed-rate moved past 6 percent in late 2005, it remained there. Expectations adjusted and anticipated further rate increases, contributing to the slowdown in sales in late 2005 and into 2006.”
Home sales in California fell in 2006 after four years of expansion. Sales in the Bay Area housing market fell at a slightly lower rate than for the state as a whole. After peaking in 2004, Bay Area sales declined 10% in 2005 and then 19% in 2006. The median price in the Bay Area-the highest of any region in the state-continued to increase by small single-digit increments throughout 2006, in part because of inventories that were well below the statewide levels.
Home sales in the Southern California region followed the general direction of the state, declining 23% from the record level of 2005. Inventory levels in this part of the state nearly tripled from a year ago, to levels in the range of their long-run average. The Central Valley had the largest decline in sales activity among the three regions in California.
“The statewide median price saw shrinking gains throughout the year, slowing from a 14 percent year-to-year increase in January 2006 to just under two percent as the year drew to a close,” said C.A.R. President Colleen Badagliacco. “That’s a far cry from the string of double-digit annual percentage gains that prevailed during the first half of this decade.
“Over the period 2003 through 2005, inventories were lean, multiple offers were common, and buyers and sellers alike knew they needed to move quickly to consummate a transaction,” she said. “But as the market began to slow in late 2005, buyers sensed that they would get a better deal if they waited, while sellers still hoped to sell their home at a premium. This drove a wedge between buyer psychology and seller psychology, creating more market friction and leading to a slowdown in activity.”
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