Now more than half a year into 2016, and the California Association of Realtors’ predictions that a shortage of available inventory and continued high costs would limit improvements in 2016 are coming true. And judging by the latest CAR report, it looks like it’s getting to Realtors in the state.
The new pending home sales report from CAR included a Market Pulse Survey, which is a monthly online survey sent to more than 10,000 California Realtors to measure data about their last closed transaction and sentiment about business activity their market area for the previous month. Approximately 300 Realtors responded.
The survey found that Realtors were the least optimistic in August since CAR began tracking this data in January 2014, and it’s on the verge of going into the negative, coming in at an index of 51, down from 52 in July and 58 in August 2015.
Here’s a quick snapshot of the type of market California Realtors are dealing with:
- More than six in 10 of properties (62%) for sale received multiple offers in August, down from 66% in July and up from 58% in August 2015.
- The average number of offers per property remained at 2.8 in August
- After reaching an all-time high of 38% in May, the share of homes selling above asking price dropped to 29% in August, up from 27% a year ago.
- The share of properties selling below asking price dropped to 41% from 48% in August 2015. The remaining 30% sold at asking price, up from 25% in August 2015.
Back in CAR’s forecast report, the association cited that in regions where inventory is tight, such as the San Francisco Bay Area, sales growth could be limited by stiff market competition and diminishing housing affordability.
Now for the first time in nearly a year, declining housing affordability topped lack of inventory as Realtors' number one concern, with 26% stating they were concerned about low housing affordability. However, concerns about a tight housing supply were not too far behind, with 19% indicating they were concerned about a tight housing supply.
Realtors also were concerned about inflated home prices/housing bubble, a slowdown in economic growth, lending and financing, rising interest rates, and policy and regulations.
The Realtor survey is tied to the monthly pending home sales report, which found that statewide pending home sales increased in August on a seasonally adjusted annualized basis. The Pending Home Sales Index escalated 6.4% from 113.9 in August 2015 to 121.3 in August 2016, based on signed contracts.
This marks the fifth consecutive positive annual improvement and the largest in 2016.
But even with the positive news, CAR noted that overall market conditions appear to be slowing down and closed transactions plateauing.
The other main CAR report, which focuses on home sales, recently reported that California home sales started to temper out in August, following the previous month’s tumble in sales.
Not too long ago, California’s housing market reached a nearly four-year high, but that momentum came to a halt in July when sales fell from previous year for first time in 18 months.
And similar to this pending home sale report, the home sales report stated that the market is likely to stay down as low housing affordability and a tight supply of homes for sale cut into demand, especially in high cost areas of the San Francisco Bay region.