Rising Prices Creates California Affordability Challenges

The California Association of Realtorsrn(C.A.R.) said on Thursday that the state’s housing market is showing “truernsigns of improvement.” The market performed better than expected in April;rnsales increased faster than at any time in the last three years and median homernprices reached the highest level since before the Great Recession. </p

Sales of existing single-family detachedrnhomes in California were at a seasonally adjusted annual rate of 394,070 units,rnan increase of 7.4 percent from March sales of 367,020.  Even with that increase sales were 7 percent lowerrnthan a year earlier, the ninth straight month of year-over-year losses, and itrnwas the sixth consecutive month that sales failed to reach a 400,000 rate.  </p

“With home prices increasing byrndouble-digits in 2013, many investors have decided to leave the market which isrnadversely affecting home sales as a whole,” said C.A.R. President KevinrnBrown.  “While the number of homes sold continued to decline from a yearrnago, the better-than normal surge in sales activities in April is encouragingrnand could be an indication that we will see further improvement in the housingrnmarket in the next few months.” </p

The median price of an existing homernwas $449,360 in April, the highest median price since December 2007.  This was a 3.2 percent increase from Marchrnand was 11.6 percent higher than in April 2013 when the median wasrn$402,830.  California has seen an annualrnincrease in its median price for 27 consecutive months. </p

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“Looking forward, it is likely thatrnwe will see a more moderate level of price increase throughout the rest of thernyear, and further improvements in sales in the spring home buying season,” saidrnC.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Increasingrnhome prices, relatively higher interest rates, and tight lending standards,rnhowever, will continue to present challenges to home buyers who are facingrnaffordability issues.  Primary home buyers may no longer have to competernwith investors in 2014, but instead they need to worry about increasedrnborrowing costs.”</p

The median marketing time for arnsingle family home sold in April was 33.8 days compared to 35 days in March andrn27.9 days in April 2013.  The inventoryrnof existing single-family homes tightened from a 4 month supply in March to 3.5rnmonths in April. A six-to-seven month supply is considered typical in a normalrnmarket.  </p

C.A.R.’s sales and price data isrngathered in a survey of more than 90 Realtor associations throughout the staternand the information is not seasonally adjusted.

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