State’s Home Sales Drop 14%; Median Price Tops $200,000 for First Time
Sales of existing single-family houses in California plunged 14.1% in April, a sign interpreted by some market analysts as the official end of a yearlong spending spree that pushed the price of housing beyond the reach of many would-be buyers.
Still, the California Assn. of Realtors reported Wednesday that the statewide median price of houses topped the $200,000 mark for the first time, indicating that softening sales have not yet caused prices to plateau. The trade group said the statewide median price rose 2.5% to $200,784 in April from $195,815 in March, and is up 25.8% from $159,542 in April, 1988.
The month-to-month decline in sales was the largest since January, 1987, when sales fell 22.4% following implementation of the Tax Reform Act of 1986.
“This is the firmest evidence we have seen that things have slowed down,” said David Hensley, director of California forecasting at the UCLA Business Forecasting Project in Los Angeles.
Prices Expected to Moderate
Real estate agents backed up the trade group’s figures. “Houses last year sold in less than 30 days. Now you’re looking at 90 to 180 days at least,” said Sherry Powers, senior vice president of Grubb & Ellis in Mission Viejo.
Falling sales and increasing prices were evident in almost all of the state’s residential markets. Economists explained that home prices do not respond as quickly to market forces as sales.
“What we expect to see as homes stay on the market a little longer, the prices will start to level off,” said Roger Cruzen, spokesman for the Realtors. “We don’t expect them to decline, certainly. But the level of price appreciation should moderate.”
San Francisco was the state’s most expensive housing market in April, with a median price of $261,520, the trade group reported. Ventura County was second with $249,847.
In Orange County, sales fell 26% in April, the biggest decline in any of the California markets surveyed by the realtors group. But the median price edged up 2% to $243,485, the third highest in the state.
Sales in the Los Angeles area fell 2.6% in April, while the median price gained 3.9% to $215,871. In the San Diego area, sales fell 20.3% from March, and the median price increased 5.4% to $176,057.
The Riverside-San Bernardino area was the only surveyed region that experienced a decline in prices. The median price in the Inland Empire fell 0.6% to $119,124, while sales were down 11.1%.
Rising house prices and sluggish sales have caused a problem for homeowners trying to trade up to more expensive homes because many are facing delays in selling their old homes.
Real estate agents said price increases have already started to taper off since April. “Sellers are not getting top dollar for their properties,” Powers said. “They have to be realistic in their pricing or (the houses) just sit on the market.”
Joel Singer, economist for the realtors group, agreed. “There is more price undercutting in the marketplace now than there was six or nine months ago,” he said.
Real estate experts said the drop in sales was not unexpected because first-time home buyers have been sidelined by soaring house prices and rising mortgage interest rates, which have jumped nearly 2 percentage points during the last six months.
While many buyers have turned to condos as prices of detached homes escalated, statewide sales of attached housing slumped in April, falling 10.8% for the month. The median price of a condominium in California rose 2.8% to $136,575 from $132,847 in March.
Based on April sales activity, it would take 5.6 months to deplete the current inventory of single-family houses listed for sale, the trade group estimated. April’s inventory, up from 4.7 months in March, is the highest total since May, 1986.
“There is no question that the inventory situation has improved dramatically,” Singer said. “It’s a pretty good sign that the sellers’ market of the last year or so is moving toward a more balanced market.”
HOME PRICES AND SALES ACTIVITY IN AREAS OF STATE
Region April, 1989 April, 1988 % Increase Orange County $243,485 $195,207 24.7 Los Angeles $215,871 $169,832 27.1 San Francisco $261,520 $195,598 33.7 San Diego $176,057 $137,560 28.0 Sacramento $99,726 $90,357 10.4 Riverside/San Bernardino $119,124 $101,270 17.6 Ventura $249,847 $188,494 32.5 California $200,784 $159,542 25.8
APRIL SALES ACTIVITY % Change % Change From March From Yr Ago Orange County -26.0 -22.7 Los Angeles -2.6 +1.0 San Francisco -13.5 +2.5 San Diego -20.3 -4.0 Sacramento -13.1 -11.5 Riverside/San Bernardino -11.1 +2.6 Ventura -9.1 -12.6 California 14.1 +1.0
Source: California Assn. of Realtors
