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Onward and Upward?

A quick look at June housing numbers for Southwest California shows that the market continues to perform moderately well showing increases in both sales and median price over the past year in most markets. Both single family home sales and median price increased a modest 3% for the first half of the year (5,435 / 5,577) ($309,293 / $319,415) for the region.

Through the first half, Murrieta showed one of the largest sales volume increases adding 8% (976 / 1,057) while Temecula actually slowed a little dropping 6% (1,009 / 948). Canyon Lake showed the largest drop-off in sales through the first half slowing 21% (135 / 106) while shedding 7% in median price ($391,523 / $364,491). Perris (10%) and Lake Elsinore (1%) also showed some sales decline throughout the half. Menifee and Hemet each increased sales and median price by nearly 8% while San Jacinto increased some 11% in each category.

Despite the drop for the half, Temecula sales jumped 18% month-over-month (168 / 206) while Murrieta sold the most homes in the region with a 13% increase over May (211 / 243). Temecula increased their median home price 5% over May ($415,000 / $436,577) and their average home price exceeded $500,000 for the first time since December 2007! Murrieta median price dropped slightly in June ($395,000 / $390,000) but average price climbed to $434,490 and Canyon Lake, thought dropping through the half, jumped 18% month-over-month ($350,000 / $429,000) in median price with an average home sale of $470,528. Amazing what a couple upper end sales will do to a market when just 19 sales are posted for the month.

Month-over-month sales for the region increased 6% (1,111 / 1,181) and June 2016 posted a 2% increase over June 2015 (1,181 / 1,156). Median price for the region increased 4% month-over-month ($320,933 / $333,325) while year-over-year median prices grew by 8% ($308,166 / ($333,325).

So what’s coming down the pike? Pending home sales are down slightly in June pointing to a potentially slower July – but probably not. Inventory climbed by 6%, and that’s good, but it still provides just a 2.5 month cushion of homes for sale while absorption continues to swallow 1.2 homes for every 1 home listed for sale. Developers can’t bring enough new product onto the market to have a significant ameliorating impact on inventory so prices continue to climb.

It’s unlikely that new home construction will expand enough to meet demand until the next market downturn, which, according to a growing number of prognosticators, will find us in 2018.

While our own median price point has not yet reached the heights of the boom period in 2007 – 2008, several areas of the state have met or exceeded that level and are reaching new levels of unaffordability daily. We recently held a series of meetings in San Francisco, that glowing City by the Bay, where the median price is approaching $1.6 million and a studio apartment will set you back $4,200/month. Our waterfront hotel also boasted a thriving tent city of homeless along its (formerly) manicured lawn and, judging by the prevailing breeze, people are leaving far more than their hearts in San Francisco.

While our home prices are not nearly as stratospheric as those in SFO, Santa Barbara or even Orange County, our own affordability is being negatively impacted, availability for first-time buyers is decreasing and we too are experiencing a local increase in homeless population.

Fortunately our next President will correct all that and it’ll all be FREE!!!

Written by Gene Wunderlich, Sr. Staff Writer

Gene Wunderlich is the Government Affairs Director for Southwest Riverside County Association of Realtors. If you have questions on the market please contact me at GAD@srcar.org or to keep up with the latest legislative and real estate trends go to http://gadblog.srcar.org/.

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