The first year-over-year price declines come as California’s crazy housing market “normalizes” amid St. Moly mortgage rates.
By Wolf Richter for WOLF STREET.
Pending sales in California fell 40.6% in June from a year ago, according to the California Association of Realtors (CAR). Pending listings in June should turn into closed sales in July, or at least a lot of them, and given the 40% drop in pending sales in June, closed sales in July are going to be interesting. The discussion below relates to sales that were completed in June.
Closed sales of single-family homes in California fell 8.4% in June from May and 20.9% from a year ago. Closed condo sales fell 27.0% from a year ago. Beyond the three-month lockdown of 2020, June sales were the weakest since 2008.
All five regions saw double-digit year-over-year sales declines – and in three of them, sales fell more than 25%: Southern California, San Bay Area Francisco and Inland Empire.
Of all the counties tracked by the California Association of Realtors, 48 saw double-digit declines in closed sales. Counties with the largest year-over-year drops in closed sales: San Benito (-48.6%), Siskiyou (-45.2%), Orange (-36.1%) and Santa Cruz ( -36.1%).
Here are the two most populous regions in California, the six counties of Southern California and the five major counties of the nine San Francisco Bay Area counties:
|Sales in June, % Variation fr. one year ago||Houses % Annual||Condos % Annual|
|Southern California counties||-27.1%||-24.8%|
|San Francisco Bay Area Counties||-26.8%||-33.4%|
|San Mateo (Silicon Valley)||-31.3%||-33.1%|
|Santa Clara (Silicon Valley)||-31.4%||-37.9%|
The unsold suddenly come out of the woodwork.
- Active registration was up 64% year-over-year, the highest since late 2019, and it happened even as sales plummeted:
- San Francisco Bay Area: +61%
- Southern California: +65%
- Central Valley: 79%
- Supply rose to 2.5 months, also the highest since late 2019, from 1.7 months a year ago.
- New listings jumped to 26,880 homes, the highest in nearly three years.
The crazy prices are starting to fall.
Listings with price drops reached a 35.5% share of total listings, the highest since 2019, with the median price drop being 5.3%.
Prices had gone crazy in recent years. But over the past few months, county by county, prices have started to fall from those ridiculous peaks. So these are agreements that were concluded in June, but that were concluded before. Pending sales in June – the 40% year-over-year slump – indicate that month-over-month price declines have not been an anomaly and are likely to become a trend .
Median prices are highly volatile, moving up and down and can be skewed by changes in the mix of homes sold, so take median prices with a healthy dose of caution.
In most California counties, prices are even higher year over year. Monthly declines are just the very beginning.
But the first year-on-year price cuts are popping up in the San Francisco Bay Area, in both single-family homes and condos.
In San Francisco, the median price of single-family homes peaked in March at $2.06 million. It then fell for three consecutive months and reached $1.9 million in June, where it had first been in March 2021. Condominium prices remained flat year over year.
In San Mateo County (northern part of Silicon Valley), the median price of single-family homes hit $2.4 million in April, then fell two months in a row, to $2.155 million, below levels June 2021. Condominium prices also fell into the red year-over-year.
|Median prices, % change over previous year, June||Houses % Annual||Condos % Annual|
|San Francisco Bay Area||3.7%||5.5%|
|San Mateo (Silicon Valley)||-5.3%||-0.7%|
|Santa Clara (Silicon Valley)||4.0%||5.5%|
Nobody knows what ‘normalizing’ means in California’s crazy housing market, where sales have now bottomed out, but that market will ‘normalize further,’ says CAR
“With inflation remaining elevated and interest rates set to climb further in the coming months, the market will further normalize in the second half of the year with weaker sales and more moderate price growth,” the CAR report said.
One thing is certain: magic is coming out of the housing market, as Holy-Moly mortgage rates start to bite — and they are biting a lot in California because prices are too high.
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