While the price of a California home rose to a level not seen in six years, it didn’t drive buyers out of the market. In March, the median price for a home rose to $366,000, which was up $16,000 from February and marks the highest price since March 2008. Despite the high price tag, home and condominium sales were up nearly 21% for the month.
March’s sales may have been up from February’s figures, but they were still down 13.3% from March 2013.
“Despite the nice jump in March home sales, sales continue to be slower than we’ve seen since 2008,” said Madeline Schnapp, director of economic research for PropertyRadar. “The supply of lower-priced distressed properties is disappearing at a rapid clip and is not being replaced by an adequate supply of non-distressed properties.”
These numbers echo the rising prices in Southern California, where the median price also rose to its highest level in six years. The high cost was a deterrent in the southern part of the state as home sales also hit a six-year low.
For the state as a whole, non-distressed property sales were up 25.2% in March. Distressed property sales were up 7.4%, despite prices being 13.3% above March 2013.
“The jump in median home prices in March was somewhat of a surprise given the lackluster sales volume since last summer,” said Schnapp. “This past month, however, seasonal demand and lack of inventory drove up prices. In addition, higher priced non-distressed properties now comprise nearly 80% of total sales volume, up from 64% a year ago.”
PropertyRadar is predicting that rapid price increases will help create more for-sale inventory by reducing the number of underwater California homeowners. The number of California homeowners with more than 10% equity in their homes increased 0.5%, or nearly 27,000, in March.
Since August, an additional 393,000 homeowners, or an increase of 8%, now have more than 10% equity in their homes and can now participate in the real estate market and either sell or buy property.
“While the decline in negative equity will help with the lack of inventory problem,” said Schnapp, “it is important to keep in mind that nearly 1.2 million California homeowners, or 13.5%, remain underwater, which continues to create significant headwinds for the California housing market.”