The Price Of Homes Decrease In California And Across The Nation
The U.S. housing market is beginning to cool its pace after three consecutive years of soaring prices. Price cuts are presently at the highest levels they have been in eight years. The price reductions are most relevant in the western part of the country where the prices for real estate rose the most.
The real estate brokerage firm Redfin reports that more than 25 percent of the homes being sold in a four-week period that ended September 16 were listed at a reduced price. A price reduction is defined by Redfin as a drop in price between one and 50 percent. This is the highest level for price reductions Redfin has reported since they begin keeping track of the statistic in 2010.
Taylor Marr, a senior analyst for the company, says that on the heels of intense competition for homes and greatly increased prices, buyers of homes are now taking advantage of the current environment by being much more selective regarding the homes on which they make an offer. Marr goes on to say that many sellers may find themselves unable to demand the prices for their homes that were available to them just a few months ago.
The critical shortages that still remain in the housing market are substantial. This fact is especially true for homes at the lower end of the market. However, an August report from the National Association of Realtors in August showed that a supply increase was experienced by the market for the first time in three years. Also, the median increase in home value is four percent over the same period. This is down from the six to eight percent that was common for the better part of the past two or three years.
Lawerence Yun is a chief economist for the Realtors. Yun explains that housing supplies are still not at a level that can be considered healthy despite the modest gains the market has enjoyed. He also said new home constructions have not yet been able to close the gap that exists between the available supply of homes and market demand created by potential home buyers. Yun says the fact that many homes are selling less than a month after being listed is evidence that new inventory is sorely needed. Yun agrees with other industry experts when he says there is a glaring need for moderately priced homes that suit the needs of entry-level home buyers.
The trends spoken of by Yun may be the norm for the nation but does not seem to apply directly to the housing market in California. Home prices in California were 17 percent higher in August of 2018 than they were twelve months before that time. Home sales also dipped to the slowest pace the state has seen in two years. The California Association of Realtors reports the median amount of time to sell a home in California increased from 18 days to 21. The state has seen the increase in home values slow down in recent months and the current value increase is up five and half percent over last year.
The Shifting California Market
The slowing price growth and increased supply of houses in California have experts predicting a shift in the state’s housing market. The question experts now ponder is how much time will be necessary for the gap that exists in price expectation between sellers and buyers begin to close.
Experts believe the price gap will close a lot quicker if the trend of higher rates for mortgages continues. The average interest rates currently offered by banks for a 30 year home mortgage has risen one-fourth of a percent in only a month. Rates are now close to five percent. This number has not been seen by mortgage seekers in almost a decade.