February 24, 2015
One of the most interesting and relevant real estate stories we’ve seen recently is the report from the California Association of Realtors® (CAR), released on February 18, stating that on a statewide basis, the number of sales in January 2015 was lower than the number of sales in both December and January 2014, and that median prices had fallen as well.
The number of homes sold declined
According to the report, closed sales of detached, single-family homes in the state (on a seasonally adjusted, annualized basis) totaled 351,890 homes in January 2015, down 3.9% from a revised 366,130 in December and down 2.7% from a revised 361,790 in January 2014. The report states that home sales have been below the 400,000 level since November 2013. (There are many qualifiers in this paragraph. First, “seasonally adjusted” means the number given isn’t the actual number of sales, but is the number after being modified to reflect seasonal factors like slower sales around the holidays or lower sales activity in the winter months. “Annualized” means the actual estimate for the month is multiplied as if the number of January sales sold each month throughout the year. Numbers as initially reported are educated “estimates,” based on sales number available at the time the report is issued. As firmer sales numbers come in later, the initial estimates are corrected for accuracy, or revised, to reflect the improved information then available.)
Though these monthly reports generally require some revision, they are the best numbers available at the time, are very thorough, and provide a wealth of interesting information.
Looking at median prices statewide (the median price is the price at which half of homes sold for more and half for less than the “median.” In other words, it is in the exact middle of a price list of all homes sold with prices listed in ascending order), the median price fell to $426,790 in January from $453,780 in December 2014, a 5.9% decrease, but rose 3.4% from $412,820 in January 2014. The report also stated that while median prices have increased on a year-over-year basis for the last two years, price appreciation has slowed in the last 12 months.
Two other points worth mentioning:
• Unsold inventory has increased statewide; that is, the number of homes available for buyers to purchase has grown, and
• The number of days required to sell a home increased.
Bringing it home
Looking to our more local markets, first, in Riverside County, the median price in January 2015 fell to $306,060 compared to $322,020 in December (5.0% decline) and $314,070 in January 2014 (2.7% decline). Though the report didn’t give details on the number of sales on a county-by-county basis, it did provide statistics showing that
• The unsold inventory in Riverside County increased to 7.1 months in January 2015 from 4.7 months in December and 5.3 months in January 2014. This shows the number of months that it would take to sell the inventory available at the current rate of monthly sales.
• The median time on market (i.e. the number of days on market it took to sell a home) increased to 70 days in January 2015 from 61 days in December and 51.6 days in January 2014.
These days on market numbers don’t provide the number of days on market for homes whose listings expired or were canceled without selling. Days on market for homes that don’t sell is a completely different metric from days on market for sales, so they actually can’t be compared.
Without going into another full-blown review of each of our nine local cities, replete with data table and bar graph, let’s take a look at the sales prices and activity in January 2015 compared to December and January 2014. The selling prices below are average, not median.
Temecula Jan 2015 Dec 2014 Jan 2014
Average selling price $412,199 $432,486 $401,161
Number of homes sold 101 161 116
Murrieta Jan 2015 Dec 2014 Jan 2014
Average selling price $367,244 $405,524 $368,872
Number of homes sold 110 140 128
Wildomar Jan 2015 Dec 2014 Jan 2014
Average selling price $340,865 $317,560 $306,818
Number of homes sold 20 33 19
Menifee Jan 2015 Dec 2014 Jan 2014
Average selling price $279,476 $297,486 $279,744
Number of homes sold 70 118 86
Canyon Lake Jan 2015 Dec 2014 Jan 2014
Average selling price $313,199 $379,909 $389,938
Number of homes sold 12 22 16
Lake Elsinore Jan 2015 Dec 2014 Jan 2014
Average selling price $279,151 $293,888 $277,983
Number of homes sold 67 94 65
Winchester Jan 2015 Dec 2014 Jan 2014
Average selling price $350,031 $351,092 $326,154
Number of homes sold 29 34 28
Hemet Jan 2015 Dec 2014 Jan 2014
Average selling price $195,937 $201,910 $184,869
Number of homes sold 115 158 101
San Jacinto Jan 2015 Dec 2014 Jan 2014
Average selling price $210,271 $199,366 $195,743
Number of homes sold 41 41 35
You can see that sales prices and activity in some of the cities above coincide with the statewide results, i.e. a lower January price and fewer sales for the month, and other cities have charted a different course. For example, Wildomar and San Jacinto both had higher average prices in January than in December, and while Wildomar had fewer sales in January than in December, San Jacinto had the same number of sales in each month. Except for San Jacinto, all of our cities had fewer sales in January 2015 than in December 2014, but all also had fewer sales in January 2014 than December 2014 – so that may be a seasonal factor rather than indicative of a trend.
Focusing on so few data points makes the identification of trends virtually impossible. And given the slower seasonal sales we expect at year end, there is nothing here to be alarmed about. Overall, the local market remains fairly strong, even though buyer demand has fallen from the high levels we saw from the spring of 2012 through June-July of 2013. We’ll take a look at some of the other factors affecting our local markets in our next blog.
© February 2015 Terry & Kathy Slavin All rights reserved.