As the housing market heads into the normal heat of the summer buying season, this year’s market could be characterized as more of a simmer than a boil. While the market has improved since the January doldrums, it has cooled considerably from past years not just locally but across the state and nation led by sales and price retreats in some of our previously most overheated markets like San Francisco and Santa Barbara. Of course, when your city becomes notorious for having numerous Poop Maps, it’s bound to impact housing values some.
Last week at our Legislative Day meetings in Sacramento, Realtors® heard from Governor Newsom in a far ranging address on the positives and negatives of this state we call home (for now). We were encouraged that housing is one of his priorities as he seems to ‘get it’ that past policies have damaged the industry, including over-regulation, CEQA and excessive development costs. We have been preaching for the past two years that SUPPLY = SOLUTION and his stated goal of increasing housing production in the state from 80,000 – 100,000 units a year to 300,000 – 400,000 units appears to address that issue. HOW he intends to accomplish that goal is still a mystery given that the legislature continues to enact measures that make it increasingly difficult and costly to develop. But, as I summarized his glowing speech, if he means ½ of what he says and can accomplish ¼ of that, I’ll be impressed. He’s a great speaker, charismatic, easy on the eyes, and didn’t wear a tie. We’re a lot alike – I don’t wear a tie either.
So where is the market?
Well, in spite of another 5% uptick in sales over March (874 / 920), April sales still came in 6% below last April (920 / 987). Year-to-date that leaves us 6% behind 2018’s pace (3,044/3,243) and some 11% behind 2017 (3,397). Pending sales are up 16% going into May which tells me we’ve got some momentum behind the numbers, but is it enough to pull us up to last year’s level?
Statewide sales have declined from last year’s numbers for 11 consecutive months – we’re not alone. Median prices also show significant slowing. Statistically month-over-month pricing was up a scant .002%
($378,411 / $379,111) across the region and up a meager 1% year-over-year ($376,833). Year-to-date, our median is up 10% over 2017 ($338,803) slowing to 2% this year ($368,690 / $375,257) following a similar trend across much of the state and the nation.
Statewide appreciation is at its slowest climb in the past 7 years – again, we’re not alone.
In a nod to numerical hi-jinx, year-over-year San Jacinto posted a 6% increase in April, Temecula, Murrieta and Menifee all increased 5%. So why does the total only show a 1% increase? Because last April Canyon Lake produced an anomalous month with a median price of $517,500. That dropped 18% to a more routine $425,000 this year. Factoring out that $90,000 variance provides a more realistic 5% year over year improvement for the month, but that impact is diluted in year-to-date totals.
As mentioned in previous newsletters, some of our slowdown in sales of existing single-family homes can be attributed to the fact that our local cities are actually doing what the Governor claims to want to do – build more homes. Recent presentation by local City Managers show numerous projects across our Southwest Cities bringing hundreds of new homes to market.
In that respect our market is at odds with much of the rest of the state where municipalities are severely limiting growth and development and, in some cases, even removing existing housing stock from the market. If you’re not familiar with what the Coastal Commission is doing, you should be. If their overreach as an appointed commission is allowed to spread to CARB, CWC or others, we’re in even more trouble than the Governor realizes. Of course, that’s just my opinion, I could be wrong.