Worst time to sell a California home in 17 months – Silicon Valley

“Bubble Watch” digs into trends that could indicate future economic and/or housing market problems.

Baz: Californians say it’s the worst time to sell a home in 17 months, a key reason for the dramatic slowdown in home buying.

Source: My trusty spreadsheet looked at the California Association of Realtors’ monthly poll on home buying sentiment.

Top line

The poll results help explain the euphoria that is quickly stifling the housing market.

Is it a good time to sell? Well, 60% of Californians said “yes” in July, down from 74% last December during the Diet.

On the other side of the coin, 16% said it was a good time to buy – down from 22% at the end of 2021.

The details

By February 2021 – 17 months ago – 60% also said it was a good time to sell.

That poll result was good news as it showed a sharp recovery below 26% in April 2020 close. Apparently, the 30-year mortgage rate of 2.65% was the lowest in 2010.

Bubble Hour: Half of California homes are down 10% or more

And it’s no coincidence that 28 percent said February 2021 was a “good time to buy,” followed by historically low rates. That’s a buying frenzy that hasn’t been peaked since.

Fast forward to the summer of 2022. This 60% selling optimism is part of the decline. But the people who buy a good time will not be bitten. Poll fans are half way through February 2021.

That kind of buying and selling demand has translated into lower home sales this summer. Consider the grim numbers in California Realtors’ July home buying report.

Sales of single-family homes fell 14 percent from June — the fourth-largest one-month decline since 1990. That means July home purchases fell 31 percent over 12 months – the ninth biggest one-year decline in 32 years.

So is it any wonder why prices are falling? Yes, falling.

California’s $833,910 median sales price for a home in July was down 7 percent from May — but still up 37 percent in three years. Southern California’s $808,000 median was down 4% from the peak but 41% higher than in 2019. And the Bay Area’s $1.3 million price was up 16% from the high but 37% higher than in 2019.

Why is winter stressful? Perhaps people who needed more living space during the pandemic already bought houses. Don’t forget that July’s mortgage rate was 5.4%, double the lowest on record. Meanwhile, price increases have been so rapid that homes in half of California metro areas are up 10% or more in value, according to Wall Street’s Fitch Ratings.

Another view

Home buying enthusiasm is waning across the country.

Polled by the Conference Board in July, 4.4% of Americans said they plan to buy a home in the next six months. This is down from 5.7% in June, 6.9% in December and 7.5% in February 2021.

Excluding the 2020 foreclosure market, July saw the slowest pace since November 2015, according to the National Association of Realtors.

How much boobies?

On a scale of zero bubbles (no bubbles here) to five bubbles (five-alarm warning)… Three bubbles!

It always amazes me how quickly markets can change for any property – up or down.

This summer, house hunters had a moment of clarity and decided there was no need to rush to buy. This wait-and-see attitude can help take some of the breath out of outright asking prices.

The question mark now is how retailers will respond to the sudden lack of demand, despite industry experts saying it was “different”. Remember the wave of ownership ready to pounce on any buying opportunity?


Increasing price reductions on listings is a sign that sellers are getting the message that “it’s different now.”

In Sacramento, 31 percent of homes for sale in July had a discount (fourth highest among the 50 largest U.S. housing markets), according to Realtor.com. That’s a 20 percent gain in a year (jump number 4 of 50 meters). Elsewhere in California…

San Diego: 25% reduction (number 10) – up to 17 points (number 7).

Inland Empire: 23% (number 12) – up to 17 points (number 10).

San Jose: 21% (number 18) – up to 15 points (number 12).

Los Angeles-Orange County: 20% (number 22) – up to 13 points (number 16).

San Francisco: 18% (number 24) – up to 12 points (number 17).

Jonathan Lansner is a business columnist for Southern California Newsgroup. He can be reached at jlansner@scng.com.

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