After dipping slightly below the 500,000 benchmark in February, sales of existing single-family homes in California bounced back to 514,090 units in March, an increase of 3.1 percent on a month-to-month basis, and a gain of 1.5 percent from last March. The statewide median home price increased 5.4 percent to $286,010 from February, after declining for two consecutive months. On a year-to-year basis, however, the median price continued to decrease for the fifth month in a row since October 2010. The year-over-year decline in price was the largest since October 2009 when the median price dropped 7.1 percent.
The drop in the statewide median price was primarily due to the price decline in non-distressed home sales as their median price decreased from $409,800 in March 2010 to $386,500 in March 2011. Meanwhile, the median price of bank-owned sales (REO) increased slightly from $200,000 of last March to $205,000 and the median price of short sales remained virtually unchanged from $275,000 to $274,700.
While home prices of distressed sales were holding up better than those of non-distressed sales, substantial price differentials continued to exist at the state level. The statewide median price of non-distressed homes sold in March was 41 percent higher than the median price of short sale properties, while the short sale median price was 34 percent higher than the median price of REO properties.
The substantial price differentials at the state level, however, are exaggerated in part by the difference in the mix of sales between distressed sales and non-distressed sales. With high concentration of distressed properties in their market, areas such as the Inland Empire and the Central Valley contribute a bigger proportion of sales in the REO and the short sales markets than they do in the non-distressed sales market. Riverside and San Bernardino, for example, made up 41 percent of the state REO sales and 28 percent of the state short sales in March 2011, but only 17 percent of all non-distressed sales statewide.
High-cost areas with fewer distressed properties, on the other hand, make up a larger share in the non-distressed sales market. Orange County and San Diego County, for example, had shares of 20 percent and 21 percent in the REO and the short sales markets in March 2011, but 40 percent in the non-distressed sales market. With different mixes of sales between distressed sales and non-distressed sales, the differentials in median prices across short sales, REOs, and conventional sales reflect not only variances in the condition of the properties, but also their geographic differences as well.
To illustrate how the geographic differences may have affected the price differentials between distressed sales and non-distressed sales, the median prices of non-distressed sales, short sales, and REO sales for three cities are shown in the table below. Results show that there are differences in prices between non-distressed sales and distressed sales at the city level, but the price differentials are generally smaller than those at the state level.
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