California's housing affordability crisis isn't going away
Especially along the coast
While California’s housing market is following seasonal norms, its affordability crisis continues to lurk in the background as homebuyers struggle to enter the market.
As it is becoming more and more apparent, investor flight to the safety of real estate may be driving first time homebuyers out of the market.
At least, this appears to be the case with California's housing markets in general.
The median price of a California home in January was $400,000, down 2.4% from a revised December 2015 price of $410,000, while the median price of a condominium was $385,000, down 3.8% for the month, the PropertyRadar latest Real Property Report found.
Compared to a year ago, median home prices were up 8.1%, while condominium prices gained 6.6%.
Most of the price increases for both single-family residences and condominiums happened during the first four months of 2015. Since April 2015, prices have been trending mostly sideways, the report stated.
“Affordability has become a significant issue in many coastal counties throughout the state, particularly in the Bay Area,” said Madeline Schnapp, director of economic research for PropertyRadar.
“Recent stock market volatility and growing fears about the national economy may send investors scampering to the perceived safety of real estate, putting additional upward pressure on prices.”
California isn’t the only thing being impacted by the volatile stock market. Freddie Mac’s latest Primary Mortgage Market Survey showed that mortgages rates didn’t change from last week due to continued market volatility.
The latest housing starts report recorded similar impacts from stocks, with Quicken Loans Vice President Bill Banfield saying, “Seasonal weather and the recent uncertainty in the stock market are likely explanations for the decline in January housing starts.”
Meanwhile, California’s single-family home and condominium sales were 24,505 in January 2016, down 29.8% from a revised 34,906 in December 2015.
However, PropertyRadar attributed the sharp decline in January to typical seasonal fluctuation.
On a year-ago basis, sales were up 3.9% from a revised 23,594 in January 2015, while condominium sales were 19.1% of total sales compared to 18.5% in January 2015.
Schnapp remains positive on California though.
“Despite a slowdown in many national economic indicators, California single family home and condominium sales picked up in January 2016,” said Schnapp. “California’s real estate market continues to be resilient. The extreme volatility in the equity markets has precipitated considerable outflows of cash, some of which may be finding its way into California real estate.”