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A Market Change Trend Is Seen Across California

A report from the Sacramento Bee in California. “Home shoppers were feeling beat up this spring, often finding themselves vying with up to a dozen other buyers for limited homes amid soaring prices. That frenzy, for now, is over.”

“Sacramento’s once-hot home sales market has cooled for three straight months, new data show. That mirrors similar easing in the Bay Area and elsewhere in California amid six years of nation-leading home price increases.”

“The number of homes sold in the Sacramento region has now dropped for the third consecutive month compared to June, July and August of last year, according to CoreLogic. August sales in particular were the lowest in three years, the company reported. Meanwhile, the number of homes on the market has edged up in recent months.”

“Real estate agent Erin Stumpf of Coldwell Banker said she believes it is too early to tell if the local market is in for a continued cooling or slump. Homes on the market still sell at a reasonable pace, she and other analysts say.”

“‘I don’t think it would be a terrible thing if the market cooled off,’ Stumpf said. ‘Prices can’t go up forever. A little more of a level playing field (for buyers) would be a positive thing. Buyers get treated more fairly.'”

“The median price for a new home in Sacramento County was $437,250 in August, down from $445,750 the month before, CoreLogic reported. Total new home sales dipped slightly as well in August compared to the same month last year.”

“Michael Strech, head of the North State Building Industry Association said sales remain decent, and builders have a lot of projects in the ground around the region. But, he said, ‘there are no high fives, no back flips’ among builders.”

“He lamented that the region is not building as many homes as it will need, but he said he too sees the easing market as good in the long run. ‘We’re interested in a balanced market,’ Strech said. ‘I don’t think anybody is overly concerned that we have had several months in a role of a flattening prices. If prices outpace wages, that is not good for anybody.'”

The Monterey Herald. “The newest major housing development on the Monterey Peninsula, Sea Haven (formerly Marina Heights), has sold more than 50 homes since sales began just a few months ago on land that was once Fort Ord.”

“Even in the face of a new report suggesting a cooling market, both Wathen Castonos Homes and Renasci Homes, the builders of the first three neighborhoods at the development, said they are not feeling the effects of that conclusion at all.”

“‘We’ve sold 51 homes to date, about 10 a month, since we opened in June,’ said Peter Castanos, owner/vice president of Wathen Castonos. ‘We haven’t felt that’ effect of pending home sales dropping 16.9 percent in Monterey County.”

“According to a survey by the California Association of Realtors, pending home sales fell markedly across California in September, with the largest regional drop-off occurring in the San Francisco Bay Area.”

“Upon build-out, the development will add about 1,000 new housing units, including single-family homes, townhouses, and cottages. The 248-acre site will also include 35 acres of parks, greenbelts and open space.”

“Castanos’ company is building the Layia and Villosa neighborhoods, while Renasci is building the Larkspur neighborhood, with more homes and development on the horizon. The Layia community is priced in the high $600,000s to the high $700,000s and range in size from 1,800 to 2,700 square feet. Villosa is priced from the low to high $800,000s and the homes are 2,300 to 3,400 square feet.”

“Castanos said the California Association of Realtors’ study, and talk of a pending bubble burst, are something to keep an eye on. ‘We’re watching those indicators carefully and we’ll adjust’ when the time comes, he said. ‘We’re still feeling the effects of the recession and are careful of what we go into the next season.'”

The Santa Clarita Signal. “A recent report showed that the inventory of Santa Clarita Valley homes and condominiums increased for the third consecutive month, rising it to its highest level since 2014. Data for August, released by the Southland Regional Association of Realtors, found that listings increased by just more than 30 percent, with 699 active homes and condominiums listed at the end of the month.”

“Tim Johnson, SRAR’s chief executive officer, said when the buyer and seller disconnect syncs up, there should be a pickup in transactions. He added that these numbers indicate that the market is changing.”

“‘We are seeing sales slow down, a sign that the market is transitioning to a buyer’s market,’ he said. ‘Buyers are hitting the wall with not being able to afford a home. Now we’re seeing buyers may wait to buy to find more favorable prices.'”

“While every market is different, a market change trend is seen across California, Johnson said. The biggest challenge in the state, however, is the lack of housing supply, he said. ‘When you have a high demand and little supply, prices go up — a situation we’ve been in for quite some time,’ said Johnson. ‘While this is a market fluctuation, what we really need to do is bring affordability and build more.'”

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This Post Has 20 Comments

  1. ‘Upon build-out, the development will add about 1,000 new housing units, including single-family homes, townhouses, and cottages. The 248-acre site…’

    248 acres? I have been told there isn’t that much available land in the entire state. And if there was it would be impossible to build more than 1 shack a year cuz of Nancy Pelosi. Now just what in the heck is going on here?

    1. Bad timing but a long time in the works for Fort Ord. I have been watching the parcels build up around it for the last 10 years and seeing the all the new chain stores like Kohl’s pop up over night. I had a friend that rented one of the first army track homes as a civilian. They allowed her to pay under market rate because she worked at the campus. So now they are deciding to make it civilian housing, great! That will add to the “lack of supply” and help this one go down even faster. Great news for Saturday!

  2. ‘We are seeing sales slow down, a sign that the market is transitioning to a buyer’s market,’ he said. ‘Buyers are hitting the wall with not being able to afford a home. Now we’re seeing buyers may wait to buy to find more favorable prices.’

    ‘Prices can’t go up forever. A little more of a level playing field (for buyers) would be a positive thing. Buyers get treated more fairly.’

    Boy, the REIC is falling all over itself to welcome this fair treatment of buyers.

    ‘‘We’re interested in a balanced market’

    Sure you are Mike.

    ‘I don’t think anybody is overly concerned that we have had several months in a role of a flattening prices’

    And don’t panic.

    ‘If prices outpace wages, that is not good for anybody.’

    Well it’s a good thing prices only outpaced wages for what, five years. So how far will they fall and what are you going to do to make a living in the meantime Mike?

  3. “‘We are seeing sales slow down, a sign that the market is transitioning to a buyer’s market,’ he said. ‘Buyers are hitting the wall with not being able to afford a home. Now we’re seeing buyers may wait to buy to find more favorable prices.’”

    Yes we buyers are waiting for the big price improvement’s LOL.

    1. ‘Buyers are hitting the wall with not being able to afford a home’

      It so happens I am reviewing the material for the AEI conference next Monday. Buyers are not being limited by tight lending. Debt to income is shooting up, especially at FHA and Fannie Mae. And it’s largely targeted at first time buyers, which is of course a recipe for disaster. So rather than hitting an affordability wall, it could be they just ran out of suckers. We used to talk a lot about pulling demand forward.

      1. From the material:

        “Principle: the only plausible reason for government to back the housing market is to help low- or moderate income families buy homes. An evaluation of the GSEs 2017 business shows, that the GSEs fail to meet this simple test.”

        “Almost half of the GSEs’ 2017 volume wasn’t even related to buying a primary residence. These borrowers could be served by the private sector” (My note: This is refinancing and 2nd houses/investors.)

        “Another 41% went to help well-to-do buyers, of which 25 percentage points went to well-to-do repeat buyers of primary residences and 16 percentage points went to well-to-do first-time buyers.”

        “Only 6.5% (1 in 16) GSE Dollars went to first-time buyers of more modest homes and only 3.7% (1 in 30) GSE Dollars went to repeat buyers of more modest homes.”

  4. While every market is different, a market change trend is seen across California, Johnson said. The biggest challenge in the state, however, is the lack of housing supply, he said.

    – KEEP BUILDING BOYZ

    1. I love the whole “lack of housing” supply mantra. Plenty of supply out there, except it’s just held off the market.

      1. Shazaam!

        ‘Data for August released by the Southland Regional Association of Realtors, found that listings increased by just more than 30 percent’

      2. That’s the thing – housing bubbles create an artificial shortage. In reality, there are way too many homes for inhabitants in this country, yet nobody in the media, REIC, .gov or banking sector wants to have an honest conversation about what’s really going on.

    2. I spent all last evening researching “train-hopping.” There are blogs with all sorts of detailed info about which trains to catch, best places to climb aboard, etc., good stuff. Don’t waste your life sitting in mom’s basement waiting for the bubble(s) to pop. Grow a pair… go see your country!

  8. “Sacramento’s once-hot home sales market has cooled for three straight months, new data show. That mirrors similar easing in the Bay Area and elsewhere in California amid six years of nation-leading home price increases.”

    Thank goodness the fever has finally broken! It will be interesting to see whether the investor hordes decide to HODL or to dump. Anecdotally I have seen lots of Uncle Warren’s For Sale signs around San Diego County as of late.

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