As CA Home Demand Rises, so do Prices

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Tobias Nergarden of REMI comments on news that home prices in California rose in September as available inventory fell, causing a net decline in home sales.

Real Estate Marketing Insider's Tobias issued his statement on the news, reported by the Los Angeles Times, that sales of California homes declined last month due to rising prices and decreasing listings; he stated his opinion that it would likely not affect the recovering housing market as demand continues to increase in the face of adverse conditions.

According to a study released by DataQuick, home prices in California continued to rise in September, but the total sales number fell. It is believed that the price drive is due largely to a change in which type of home is selling. The statewide inventory of marketing for real estate broker is beginning to exhaust its supply of lower-priced homes, driving the median price up. According to John Walsh, the president of DataQuick, this is still good news, indicating that “a lot of fence-sitters are getting active.”

More concerning is the degree of the drop in home sales: while the month-to-month drop from August was 16.5 percent, typical of seasonal market change, the year-over-year figure versus September 2011 was a 2.7-percent decline, the first such decline in 14 months. The degree of contrast with the year-over-year pricing figure is also interesting: the current median home price of $287,000 is a whopping 15.3-percent increase from its September 2011 level.

More good news comes in the form of foreclosure news. After the hard knocks of the last three years that the California real estate market is still reeling from, foreclosures are continuing to fall. DataQuick measures foreclosure numbers according to what percentage of the resale market they comprise; in September, the foreclosure market share was 17.7 percent. While this may sound high, it’s down from 20 percent in August and almost half the percentage of September 2011, when the foreclosure market share was 33.8 percent. Meanwhile, short sales, an reconciliation alternative to foreclosing, was up slightly from August and up about 4 percent from last year, indicative of increased housing demand.

Also worth noting is that local housing markets in California experienced different results. For example, in the Bay Area, while home sales were down from August (as expected), September 2012 actually showed a 1.5-percent increase over sales numbers from 2011. In Southern California, while the month-over-month and year-over-year figures were both declines, the year-over-year decline of 1.6 percent was just over half of the state average. Both of these metropolitan areas continue to see home prices rise.

Tobias Nergarden commented on new figures released by DataQuick that show decreased home sales in California, but also showed reasons why the real estate market may still be on the rise, including reduced foreclosures, high demand and increasing prices. For more real estate lead information visit realestatemarketinginsider.com.

About Real Estate Marketing Insider:
REMI provides real estate professionals with hot news tips, insider analysis and cutting-edge marketing tips. The journal is based out of La Jolla, CA.

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