California's Competitive Housing Market Persists, Bigger Premiums Paid Over List

California's Competitive Housing Market Persists, Bigger Premiums Paid Over List

Residential News » Los Angeles Edition | By Miho Favela | May 26, 2015 9:21 AM ET

According to the California Association of Realtors, California's housing market continuing its upward trend as pending home sales registered their fifth straight annual gain in April, with the last three months being in the double-digits.
California Realtors report the following home sales data for April 2015:

  • California pending home sales were up 13.6 percent on an annual basis from the 114 index recorded in April 2014, marking the fifth straight month of year-to-year gains and the third straight month of double-digit advances.
  • Statewide pending home sales dipped slightly in April, with the Pending Home Sales Index (PHSI) decreasing 0.6 percent from a revised 130.2 in March to 129.4, based on signed contracts.  The month-to-month decrease was below the average March-April gain of 1.7 percent observed in the last seven years.
  • Pending home sales in the San Francisco Bay Area, Southern California, and Central Valley regions posted back-to-back, double-digit, year-over-year gains.
  • San Francisco Bay Area's PHSI stood at 136.6 in April, down 6.8 percent from 146.6 in March but up 12 percent from the 122 index recorded in April 2014.
  • Pending home sales in Southern California were down 10.4 percent in April to reach an index of 103.5, but were up 13.5 percent from the April 2014 index of 91.2.
  • Central Valley pending sales increased 28.1 percent from March to reach an index of 129.1 in April, and up 15.8 percent from the 111.5 index of April 2014.
  • The share of equity sales - or non-distressed property sales - edged up in April to make up 91.9 percent of all home sales, the highest level since 2007. Equity sales made up 91 percent of all home sales in March and 88.3 percent in April 2014. The share of equity sales has been at or near 90 percent since mid-2014.
  • Conversely, the combined share of all distressed property sales (REOs and short sales) fell in April, down from 9 percent in March to 8.1 percent in April.  Distressed sales made up 11.7 percent of total sales a year ago. Twenty-three of the 43 counties that C.A.R. reported showed month-to-month decreases in their distressed sales shares, with San Mateo having the smallest share of distressed sales at 1 percent, followed by San Francisco (2 percent), and Santa Cruz (2 percent).  Kings and Plumas counties had the highest share of distressed sales at 24 percent, followed by Amador, Lake, and Tulare (all at 16 percent). 
  • The share of sales closing above asking price has been on an upward trend for three straight months, indicating the return of bidding wars in some local markets. More than a third (36 percent) of transactions closed above asking price in April, up from the lowest point of 16 percent in January 2015.  More than four in 10 homes (41 percent) closed below asking price, and 23 percent closed at asking price.
  • The premium paid over asking price increased in April, suggesting heightened market competition among home buyers. In April, homes that sold above asking price sold for 10 percent above asking price, up from 7.7 percent in March and up from 8.7 percent in April 2014.
  • Homes that sold below asking price sold for an average of 11 percent below asking price in April, unchanged from January.
  • The share of properties receiving multiple offers increased for the fourth straight month. Seventy-two percent of properties received multiple offers in April, up from 62 percent in March and up from 71 percent a year ago.
  • The average number of offers per property also has been increasing since January. In April, the average number of offers on a property was 3.6, up from 2.7 in March and up from 2.9 a year ago.
  • All cash purchases and open house traffic were up in April, compared to the previous year, suggesting the spring/summer home-buying season is off to a strong start. 
  • The majority (55 percent) of Realtors expect better market conditions over the next year.

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