Is a Sellers' Market Emerging in California?

A sellers’ market appears to be emergingrnin some areas in California.  ThernCalifornia Association of Realtors® (C.A.R.) said Thursday that favorable homernprices and record-low interest rates are making the market competitive to thernpoint that nearly six of ten houses are receiving multiple offers.   C.A.R. made the comments as it releasedrnresults of its 2012 Annual Housing Market Survey.</p

Fifty-seven percent of home salesrnfeatured multiple offers in 2012, the highest in at least the past 12rnyears.  Each home that received arnmultiple officer received an average of 4.2 compared to 3.5 offers in 2011.  Lower priced homes and distressed properties -rnbank-owned real estate (REO) and short sales – had more multiple offers thanrnmarket sales, seven out of ten compared to one-half.</p

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Competition has led to higher pricesrnand 41 percent of homes sold at the asking price, the highest portion sincern2005 and up from a long-run average of 32 percent.  Homes also sold fasterrnwith market sales taking 32 days on average compared to 67 days in 2011 and REOsrnin 30 days compared with 50 days last year. rnShort sales still take longer than other sales because of the complexityrnof the process but the number has been cut to 90 days from 141.</p

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Nearly a third of all homebuyersrnpaid with all cash in 2012 and 16 percent of buyers bought for investmentrnpurposes.  International buyers made uprn5.8 percent of the buyers with the largest numbers coming from China, Canada,rnIndia, and Mexico.</p

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Seventy-seven percent of buyers werernpurchasing a primary residence and 40 percent of those who were first-timernbuyers bought either an REO property or a short sale, down from 44.3 percentrnlast year primarily because of a shortage of inventory in those categories. </p

Very few home buyers have a secondrnmortgage, probably reflecting tighter lending standards.  The share of home sales with second mortgagesrnhas dropped from 43.4 percent in 2006 to 1.8 percent in 2012.</p

 “Well-qualified buyers are recognizing thernonce-in-a-generation opportunity to purchase a home in California and arernjumping into the market,” said C.A.R. President LeFrancis Arnold. rn”However, the fierce market conditions have forced many buyers to compete withrnall-cash offers and investors, setting off multiple offers and bidding wars,rnmaking it even more difficult for first-time buyers to become homeowners.”</p

C.A.R. has conducted its marketrnsurvey since 1981, mailing it to a random sample of 15,000 Realtors throughoutrnthe state.  This survey seeks informationrnabout the Realtor’s most recent sales transaction that closed in the secondrnquarter of 2012.

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