Home sales in California decreased significantly in April from both the previous month and the previous year, according to a new report from the California Association of Realtors (C.A.R.). The data suggests that the housing market here is beginning to feel the full impact of the COVID-19 pandemic and California’s stay-at-home order.
Closed escrow sales of existing single-family detached homes in California dipped below the 300,000 mark in April for the first time since March 2008, reaching a seasonally adjusted annualized rate of 277,440 units. That’s a 25.6% decrease compared to this March and a 30.1% decline from a year earlier.
The month-over-month drop was the largest since C.A.R. began tracking this data in 1979. Additionally, the year-over-year decrease was the first double-digit loss in 15 months and the largest since December 2007.
In a news release, C.A.R. President Jeanne Radsick noted:
“As expected, California home sales experienced the worst month-to-month sales decline in more than four decades as the coronavirus pandemic prompted stay-at-home orders, which kept both buyers and sellers on the sidelines. While some economic activity will resume as the state gradually reopens, the housing market is expected to remain sluggish for the next couple of months as potential market participants deal with the impact of stay-in-place restrictions.”
Effects on Home Prices
Although California’s median price stayed above the $600,000 benchmark for the second consecutive month this April, price growth appears to be plateauing compared to the past six months. The median price for existing single-family homes in the state was $606,410, a 1.0% drop from March. The 0.6% gain essentially showed no movement from April 2019’s median price of $603,030.
C.A.R. Senior V.P. and Chief Economist Leslie Appleton-Young stated:
“With the recession-level decline in closed home sales, the statewide median price was just barely able to avoid going into negative territory in April, in part because high-end homes saw the biggest sales declines. Even with tight supply and low interest rates, home prices will continue to be tested by economic deterioration in the short term.”
Still Some Consumer Optimism
C.A.R. also conducted a monthly Google poll and found consumer responses reflected the recent dramatic changes in market conditions. Almost a third (29%) of respondents said it is a good time to sell – that’s up from 26% a month ago, but down from 45% a year ago.
Additionally, consumers still seem to be optimistic about home buying despite the market uncertainty, as 31% of those surveyed said they believe now is a good time to buy a home. This is significantly higher than last year when only 22% said so.
The reasons consumers think purchasing property would be a right move now are the following:
- because it will be easier to find a home in the next 12 months (51% thought so)
- home prices are less likely to rise (27% believed so)
- interest rates will continue to fall (according to 66% of them).
Although the number of optimists increased, only 7% of them said they plan to purchase a home in the next year. Perhaps this is because they aren’t yet sure that California’s overall economic conditions will improve over the next 12 months – 62% said they won’t.
A Look at Regional Statistics
Sales dropped by more than 25% from last year in all major California regions. The Bay Area recorded the largest decline at -37.4%, followed by the Central Coast (-31.6%), Southern California (-30.2%) and the Central Valley (-26.1%).
Nearly all of the 51 counties C.A.R. tracked had a year-over-year sales loss in April. Mono recorded the largest decline, at -62.5%, followed by Marin (-60.6%) and San Francisco (-52.8%). On the flip side, four counties saw sale increases: Del Norte (21.1%), Kings (13%), Mariposa (8.3%) and Lake (3.4%).
Median home prices dropped from a year ago in the Central Coast (-6.1%) and Bay Area (-0.8%) but rose in both the Central Valley (4.8%) and Southern California (3.5%).
Most counties recorded year-over-year price gains in April, with Siskiyou showing the largest, at 24.8%. However, 12 counties saw declines – Plumas led the pack at 36.1%.
The COVID-19 pandemic and associated self-isolation efforts have clearly affected the California real estate so far. However, it remains to be seen how much more and for how long the state will continue to feel these effects.