By Sara Sutachan, senior research analyst & Robert Kleinhenz, Ph.D. deputy chief economist.
Sales of existing single-family homes in California held steady above the 500,000 mark for the sixth consecutive quarter in the first quarter of 2010, while the median price of a home registered its second year-to-year gain since it hit bottom a year ago, the result of lean inventories in much of the state.
Sales hit 529,140 homes in the first quarter of 2010, dropping 4.1 percent from 551,590 homes in the fourth quarter of 2009, and 6.9 percent below the first quarter of last year when there were 568,540 homes sold. Sales rebounded from their cyclical low of 276,700 sales in the fourth quarter of 2007 to pre-peak sales levels by the fourth quarter of 2008. The market has maintained a sales pace in the low- to mid- 500,000s since then.
The median price of an existing single-family detached home in California jumped 17.0 percent from a year ago to $289,730 in the first quarter of 2010. This was the largest year-to-year gain in nearly five years. The median price fell 4.5 percent from median of $303,460 in the prior quarter, but was more than $40,000 higher than the low price for the cycle of $247,630 that occurred back in the first quarter of 2009.
Inventory levels have been consistently below the long run average of 7 months since the fourth quarter of 2008, and have contributed to the turnaround in home prices over the past year. The unsold inventory index stood at 5.7 months in the first quarter of the year, up from 4.1 months in the prior quarter but down from 6.6 months a year earlier. Significantly, the number of listings was about 20 percent below the long run average in the first quarter, suggesting that home prices will remain stable or show gains at least through the next quarter.
Sales activity in Southern California tracked closely with the state’s raw (not seasonally-adjusted) first-quarter sales declining 6.6 percent on a year-to-year basis from the first quarter of 2009. The sales activity varied in the different regions in the area, with Orange County and Palm Springs/Lower Desert Region growing at 11.4 percent and 7.3 percent on a year-to-year basis respectively, and with Riverside/San Bernardino at the other end of the spectrum with sales falling at 25.8 percent compared to last year. The decline in sales this year was due in part to exceptionally strong sales a year earlier. The median price for Southern California increased 16.7 percent year-to-year to $297,540 in the first quarter of 2010. Home prices rose in all regions with year-to-year gains ranging from a 4.6 percent increase in the Riverside/San Bernardino area to a 21.2 percent gain in Ventura County.
Home sales in the San Francisco Bay Area bucked the trend of the state increasing 10.3 percent year-to-year in the first quarter of 2010, well above the growth rate of the state. All counties except Solano and Sonoma counties, where inventories of distressed properties remained constrained, registered sales increases when compared to the same quarter of last year. Contra Costa and Marin showed significant gains in sales activity year-over-year in excess of 50 percent growth, mainly due to the problems in jumbo financing a year ago that seriously hampered sales of the first-quarter 2009. The median price for the Bay Area grew at a strong rate of 28.9 percent to a median of $518,170 in the first quarter of 2010. Alameda, San Mateo, and Santa Clara all posted annual price gains in excess of 20 percent, while the other areas posted moderate gains ranging from 5.3 percent in Solano to 16.2 percent in Contra Costa.
Sales in the Central Valley region have dropped off significantly, both from the prior quarter and from a year ago. Sales in the first quarter of this year fell 16.4 percent from the fourth quarter of last year and were 20.9 percent below the level of sales from the first quarter a year earlier. Sales in the first quarter last year were exceptionally high because of the large wave of distressed sales from 2008 that spilled into the first quarter of 2009. Tighter inventory levels in the subsequent quarters have constrained sales and contributed to the year-to-year decline. Meanwhile, the decline from the fourth quarter of 2009 may be explained in part by the surge in sales during that quarter in the Central Valley and elsewhere around the state tied to the anticipated November expiration of the Federal first-time buyer tax credit (which was ultimately extended through the first part of this year). Counties in the region had year-to-year price changes ranging from a slight decrease of 0.8 percent in Merced to a 6.0 percent gain for Sacramento in the first quarter of 2010.
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