California single-family home and condominium sales were 39,091 in August, a gain of 4.4 percent for the month but nearly unchanged from 39,062 in August 2015. Taking a longer-term view, year-to-date sales (January through August 2016) totaled 282,260 properties, down 3.4 percent from the same period in 2015. The median price of a California home fell 0.9 percent in August to $435,000 from $439,000 in July but gained 4.8 percent from $415,000 a year ago. The median price of a condominium was $416,000, down 1.0 percent from an adjusted $420,000 in July 2016 but up 3.5 percent from $402,000 in August 2015.
“In the same way that July sales were artificially depressed by fewer business days than the prior year, August sales were artificially goosed higher with more business days,” said Madeline Schnapp Director of Economic Research for PropertyRadar. “The best way to make sense of these calendar quirks is to step back and take a year-to-date view. When we do, we see slightly lower sales and higher prices, in perfect alignment with our theme since October 2015 – “Flat is the New Black.”
At the regional level, prices fell 2.2 percent year-over-year in the San Francisco Bay Area, but gained 7.7 percent in the Sacramento-Central Valley region and 5.7 percent in Southern California.
In 18 of California’s largest 26 counties, median prices were up in excess of five percent year-over-year. The largest median price gains were in the following counties: Santa Barbara (+18.2 percent), Marin (+15.2 percent), Sonoma (+12.5 percent), Merced (+12.2 percent), and Sacramento (+11.2 percent). Prices fell year-over-year in only three California counties this past month: Kern (-4.8 percent), San Francisco (-2.0 percent), and Contra Costa (-1.1 percent).
Year-to-date through August, cash sales were down 7.8 percent. Cash sales were 19.8 percent of total sales this past month, up 1.2 percent from 18.6 percent but nearly unchanged from 19.2 percent in June 2016.
“Cash sales are considerably lower this year due to prices that are now unattractive to investors,” said Schnapp. “Despite the pull-back, cash sales remain nearly 20 percent of sales, much higher than historic norms, and remain an important part of the real estate market.”
At the county level, cash sales were the highest in San Luis Obispo (+28.0 percent), Sonoma (+27.3 percent), Monterey (+27.5 percent), San Francisco (+24.8 percent) and Placer (24.5 percent) counties.
“From this list of counties, the less populous suburban areas appear to be the beneficiaries of cash-rich buyers,” said Schnapp. “We suspect some of these buyers are recent retirees leaving dense urban areas with their one-time $500,000 tax-free capital gain windfall and relocating. In addition, boomer parents are purchasing homes and condos to ‘rent’ to their cash-strapped millennial children and grandchildren in what we have termed, ‘Phantom Millennial Home Ownership.’ ”
“Peering into our crystal ball, our “Flat is the New Black” market characterization of flat sales and higher prices, remains intact for the foreseeable future,” said Schnapp. “That said, we have our eyes on the San Francisco Bay Area, recent volatility in short-term interest rates and of course the presidential election.”