'Soft landing' runs its course in California real estate market

Sales down 11 percent from November 2004 to November 2005
Inman News
The median price of an existing home in California in November increased 16.2 percent and sales decreased 11.2 percent compared with the same period a year ago, the California Association of Realtors trade group reported today.

"The California housing market continues to experience year-over-year double-digit price appreciation, which is consistent with our expectation that the statewide median for 2005 will increase by 16 percent over last year," said Vince Malta, CAR president.

"While year-to-date sales in November were 1.7 percent above last year's pace, we are starting to see the ‘soft landing' we have been expecting," said CAR Vice President and Chief Economist Leslie Appleton-Young. "The year-to-year decline in sales is not surprising, given the market was so strong in November 2004. Additionally, rising mortgage interest rates, which have moved above 6 percent over the last few months, contributed to the slowdown in sales."

Closed escrow sales of existing, single-family detached homes in California totaled 579,560 in November at a seasonally adjusted annualized rate, according to information collected by CAR from more than 90 local Realtor associations statewide. Statewide home resale activity decreased 11.2 percent from the 652,340 sales pace recorded in November 2004, the trade group reported.

Statewide sales figure represents what the total number of homes sold during 2005 would be if sales maintained the November pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during November 2005 was $548,400, a 16.2 percent increase over the $471,980 median for November 2004, CAR reported. The November 2005 median price increased 1.8 percent compared with October's $538,770 median price.

Among the resale housing figures reported by CAR for November 2005:

– CAR's Unsold Inventory Index for existing, single-family detached homes in November 2005 was 3.9 months, compared with 2.8 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

– Thirty-year fixed mortgage interest rates averaged 6.33 percent during November 2005, compared with 5.73 percent in November 2004, according to Freddie Mac. Adjustable mortgage interest rates averaged 5.14 percent in November 2005 compared with 4.15 percent in November 2004.

– The median number of days it took to sell a single-family home was 39 days in November 2005, compared with 36 days (revised) for the same period a year ago.

Regional sales data are not adjusted to account for seasonal factors that can influence home sales, the association reported. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of Realtors throughout the state. MLS median price and sales data for condominiums are based on a survey of more than 60 associations. The median price for both detached homes and condominiums represents closed escrow sales.

Localized statistics generated by CAR and real estate information company DataQuick Information Systems revealed that 96.1 percent of cities and communities in the state, or 372 of 387, showed an increase in their respective median-home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates.

Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity, CAR reported, and some of the variations in median home prices may be exaggerated because of compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are available online at http://www.car.org/index.php?id=MzU3MTg=.

Among the findings:

– Statewide, the 10 cities and communities with the highest median home prices in California during November 2005 were: Manhattan Beach, $1,803,000; Newport Beach, $1,474,500; Laguna Beach, $1,360,000; Palos Verdes Estates, $1,350,000; Burlingame, $1,277,250; Los Gatos, $1,260,000; Rancho Palos Verdes, $1,197,500; Calabasas, $1,195,000; Danville, $1,096,500; Cupertino, $923,000.

– Statewide, the 10 cities and communities with the greatest median home price increases in November 2005 compared with the same period a year ago were: Delano, 79.5 percent; Sanger, 64.2 percent; Banning, 56.6 percent; Twentynine Palms, 54.4 percent; Ridgecrest, 53.4 percent; Yucca Valley, 53.1 percent; Barstow, 51.8 percent; Bakersfield, 46.8 percent; La Quinta, 46.2 percent; Atwater, 45.9 percent.

The California Association of Realtors, with headquarters in Los Angeles, has about 180,000 members.