California has been under a major housing inventory crunch for a long time now, sending home prices through the roof in many centers across the state. It’s been so bad that many families have chosen to bail out of California altogether in an effort to find some relief from the housing affordability crisis that’s been plaguing the state.
But we could be on the brink of some reprieve. Inventory has increased slightly, providing relief to buyers who have been battling against low inventory and sky-high prices.
According to the California Association of Realtors, pending home sales in California rose in June, marking the third consecutive month of increases. Such a scenario will lead to a higher number of closed transactions for a good part of the summer.
Even the San Francisco Bay area managed to boast more pending sale contracts compared to Central Valley and Southern California regions, with an increase of 5.1% from the same time last year. San Fran has been lagging behind these there areas since 2016 rolled around.
Joining San Francisco in an improvement of housing supply are the Alameda, Santa Clara, and San Mateo counties.
Buyers have been hoping and praying for housing inventory to start increasing, and for prices to cool. And it looks like that’s exactly what’s happening.
According to the Black Knight Home Price Index (HPI), home prices increased just 0.6% from last month, compared to the national average of 1.1%. In fact, the biggest mover is Idaho, which boasted a home price increase of 1.9% from the month before.
According to California Association of Realtors’ (CAR) Market Pulse Survey from June, the number of houses selling over the listing price dropped to 35%, compared to its peak of 38% in May. Homes that sold below listing price accounted for 37% of all pending sales in June. In this category, homes sold an average of 11% under the listing asking price in June, an increase from 10% in May.
The average number of offers per listing declined slightly to 3.0 in June, from 3.1 in May and 2.9 last June 2015. About 22% of properties experienced price reductions in June, up slightly from 21% in June 2015.
Yet despite such signs of slight improvements in housing supply and affordability, the real estate market in California still remains competitive. Seventy-two percent of sales received multiple offers in June, compared to 65% in June 2015.
In addition, properties that did get offers over the listing price saw premiums rise to 11%, up 1.6% from May, though unchanged from the same time in 2015.
There’s still a long way to go for California’s housing supply and affordability to improve, but these numbers offer some glimmer of hope for buyers on the prowl for a new home.