By Carmen Hirciag, Membership Development Manager

May displayed continued improvement in the California housing market as sales activity increased for the second consecutive month and prices rose for the third consecutive month.  The number of single-family homes sold in May was 556,590, up 3.3 percent from the previous month, and up 49 percent from the previous year.  The median price of a single-family home increased 4.2 percent since April to $267,570, but decreased 30 percent from a year ago.  The decreasing price trend is showing signs of slowing from its peak of nearly a 41 percent year over year decline in September 2008 to a 30 percent decline in May 2009.  Lower prices have resulted in growth in housing affordability and a good buying environment.

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The 10th annual C.A.R. buyer survey reveals how home buyers have changed their behavior to adapt to the new housing market.  Distressed sales made up 51 percent of the homes sold and have contributed to the significant price declines.  Despite the price declines of recent years, buyers appear confident in the future direction of values, with the majority believing that prices will go up or stabilize in the next five to ten years in their neighborhood.

Market conditions have made homes more affordable for prospective buyers, but obtaining financing is proving to be a challenge for most.  Buyers rated their ability to secure a loan an average of 8.1 on a scale of 1 to 10, with 10 being “very difficult”.  This is an area of opportunity for agents to demonstrate their importance to clients in the home buying transaction, in addition to price negotiation, determining what comparable homes sell for, finding the right home, and negotiating the terms of the transaction.

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The survey provides good insight into the intricacies of the relationship between consumers and their agents.  The top four reasons buyers stated for selecting the agent they worked with after interviewing others were: understood how to purchase distressed properties, most responsive, seemed like he/she would be the most the aggressive, seemed able to negotiate the best possible purchase price in this type of market.   These attributes are particularly valuable now, given current market conditions.

What advice would clients give to their agents?  Buyers want their agents to improve the speed of communications, provide references for lenders who will perform, have more expertise about dealing with banks on distressed properties, and negotiate aggressively on their behalf, among other things.