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California cool: Home sales drop 4% despite price plateau

Golden state housing “takes a breather”

California single-family home and condominium sales fell 4% to 41,143 in July from 42,872 in June but were up 10.6% from 37,196 in July 2014.

Driving the increase in year-over-year sales was the 14.2% increase in non-distressed property sales. Meanwhile, distressed sales retreated 6.6%. Despite the July pullback, distressed sales have trended mostly sideways for the past 18 months and remain a source of opportunity.

“After a better than expected showing in June, California real estate sales took a breather in July,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “In our May report, we forecast that high prices may limit sales in the last half of the year. So far, July sales appear to support that conclusion.”

The median price of a California home in July was $416,000, unchanged from June. At the county level, within California’s 26 largest counties, 16 counties saw median price decreases while 10 experienced price increases. The counties with the biggest median price decreases were Marin (-4.9%), Merced (-6%), San Luis Obispo (-6.7%) and Solano (-4.4%).

Click to enlarge

(Source: PropertyRadar)

On a year-over-year basis, the median price of a California home was up 4.3% from $399,000 dollars in July 2014. Despite the slowdown in price appreciation, at the county level, year-over-year median price increases exceeded 5% in 17 of California’s 26 largest counties and 6 of those experienced double-digit price increases. The counties with the largest annual price increases were Kern (+11.1%), San Francisco (+15.4%), San Mateo (+23.3%) and Stanislaus (+12.6%).

“High prices have put a brake on sales,” said Schnapp. “Realtors in several northern California coastal counties have reported that asking prices have been lowered to attract buyers. That’s good news for buyers.”

“A few California counties continue to defy gravity due to what we call the ‘Google Effect’,” said Schnapp. “In July, for the first time in our records, the county with the highest median home price was San Mateo at $1.23 million, up 23.3% from a year ago. San Francisco County has held the most expensive county title since mid-2013 so it was a surprise to see San Mateo County topple San Francisco for the top spot.”

Flip sales have been steadily increasing since January 2015, up 2.3% for the month and 4.6% over the past 12 months. From July 2014 to January 2015, flip sales fell 32.6%.

Since then, flip sales have increased 55.2%.

“Flippers are taking advantage of the double digit price increases since the beginning of the year,” said Schnapp. “The steady supply of distressed properties combined with the jump in prices has created an attractive environment for the flip investor to sell at a profit.”

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