The “Looking Glass” ponders economic and real estate trends through two distinct lenses: the optimist’s “glass half-full” and the pessimist’s “glass half-empty.”
Buzz: California home prices are now 18% off their all-time high, but sales activity has risen in three consecutive months.
Source: My trusty spreadsheet reviewed the California Association of Realtors’ February home sales report for existing, single-family homes.
Debate: Is California’s housing market recovering from its bubble bursting?
Glass half-full
Californians bought 284,010 homes in February, up 17.6% vs. January. It was the third monthly gain in sales.
But, there are some caveats:
Sales are off 33% in a year, the 20th-consecutive year-over-year sales decline. And it was still the third-slowest-selling February since 1990, and the 27th-slowest month for sales overall since 1990.
“A brief interest rate reprieve and softer home prices during January created a window of opportunity for homebuyers to dip their toes into the home-buying waters, which helped boost home sales to the highest level in five months,” said Jennifer Branchini, the association’s president and a Bay Area Realtor.
Glass half-empty
The California median was $735,480, off 2.1% in a month. Prices have dipped in eight out of the last nine months.
And the median is down 4.8% in a year to the lowest level since $699,000 in February 2021.
“The recent failure of a handful of tech-focused banks caused an unexpected drop in interest rates, which could offer an opportunity in the near term for homebuyers who have been waiting on the sidelines to lock in a lower rate,” said Jordan Levine, the association’s chief economist. “However, any decline in rates is not likely to be sustainable since inflation remains high, and the Federal Reserve is willing to take some calculated risks in order to keep inflation under control.”
Bottom Line
Steeply falling prices have yet to get house hunters in a serious shopping mood.
And please note the California median benchmark is 18% off its $900,000 peak of May 2022, just 10 months earlier. Compare that dip with the 10-month drops off in previous peaks:
- 1991: Prices fell 6% in 10 months, with losses that grew to 20% over 69 months.
- 2007: Prices fell 30% in 10 months, with losses that grew to 59% in 21 months.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
Source: Orange County Register
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