Research firm RealtyTrac today released its home sales report for May. The data show a 15 percent drop in California sales compared to a year ago. RealtyTrac analysts attribute the drop in sales to a drop in supply.
One of the reasons supply is down is because there are fewer distressed homes on the market. Distressed sales overall – including both short sales and sales of properties in some stage of foreclosure – represented 17 percent of all transactions in May. “Which is still historically high, but it’s down from 21 percent a year ago,” says RealtyTrac's Daren Blomquist.
He says short sales, when a homeowner sells their house for less than full value, are particularly way down. “A year ago 7.5 percent of all sales in California were short sales and now this year in May of 2014 it’s down to 3.6 percent.”
Blomquist says sales of bank-owned properties however were up a bit – representing 13.3 percent of all sales in May, up from 12.9 percent a year ago. Blomquist says banks are finally pushing through properties that have been lingering in the foreclosure process.
Meanwhile, sales of high end homes represent a growing share of California’s housing market. Blomquist says 33-percent of the homes sold in May went for between $400,000 and $750,000; up 5 percent from a year ago. And 16 percent sold for $750,000 or more; that’s up from 14 percent last year.
Blomquist says there are more higher priced homes on the market. “A lot of the lower end inventory, particularly the distressed inventory, has been worked through and already purchased in California. And so what’s left, that’s a bigger piece of the market now, are the next tier up.”
California’s median home sales price in May was $365,000; up 3 percent from April and a 16 percent increase from a year ago.
Metro areas with the highest percentage of REO, or bank-owned, home sales in May were Modesto at number one; Stockton at number four; and Sacramento at number nine. Nearly 27-percent of the homes sold in Modesto last month were bank-owned; in Stockton it was just over 21-percent; and in Sacramento 16-percent were bank-owned.
Blomquist says there's still a lot of foreclosures in limbo. "Properties that have started the process maybe two or three years ago that the banks are finally pushing through," says Blomquist. "Maybe the property had a problem with the title or documentation or the homeowner was fighting the foreclosure or trying to pursue some foreclosure alternative that made that property linger in foreclosure for longer and now the banks are finally completing the process."
Home values in the Sacramento area are up. The median sales price in May was $275,000. Blomquist says that's up 16-percent from a year ago but it's the lowest annual appreciation since December of 2012.
"A year ago if we look at May of 2013 in Sacramento, home prices were increasing 32 percent," says Blomquist. "So it's gone from 32 percent appreciation a year ago, cut in half to 16 percent this year and that's, at the end of the day, a good thing. The only people who might be complaining about this are folks who still have negative equity in their homes and are hoping that home price appreciation will help them regain that equity as quickly as possible."
Blomquist says it's a good thing that home price appreciation appears to be leveling off because it's a sign that the market is not getting over-inflated again.