Kevin Kueneke | Several Factors Hold Up California Home Sales Volume
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Several Factors Hold Up California Home Sales Volume

Several Factors Hold Up California Home Sales Volume

Home sales have plateaued throughout 2017, in California. 39,900 new and resale home transactions closed escrow during March, which was 5% higher than a year earlier in 2016.

Last year ended with 457,900 home sales in California, which is 7,200 more sales than the previous year, but still 40% below 2005 peak numbers.

Home sales will continue to struggle with rising interest rates which delay homebuyer enthusiasm and purchases. Home sales volume are to get a significant boost in 2018.


Chart update 05/01/17

Mar 2017 Feb 2017 Mar 2016
Southern CA 22,000 14,900 38,000
Northern CA 17,800 12,700 17,600
CA Total 39,900 27,700 38,000

 

The above chart reveals the home sales volume of single family residences on a month-to-month basis.

The reason home sales vary from month-to-month is due to many different reasons, one of them being homebuyer demand influenced by the following factors of California’s homebuying market:

  • seasonal differences
  • changes in home prices;
  • mortgage interest rates;
  • consumer confidence;
  • the presence of investors and real estate speculators in the market;
  • negative equity status;
  • the quantity and quality of jobs held by homebuyers; and
  • homebuyer saving rates.

 

Seasonal differences in annual sales volume

It’s normal for home sales volume to rise in the first half of the year and fall after June, generally speaking.


Chart update 12/10/2015

The above chart shows average home sales as experienced from 2011-2015. The most homes are consistently sold each year in June, with a small increase in December.

The competitive broker

Broker’s are required to get creative while home sales volume is down.

To supplement their income, SFR brokers and agents might consider adding SFR-related services to become “all-service brokers”.

These services include:

  • escrowing their in-house transactions under the broker’s license;
  • entering into or expanding property management services;
  • negotiating equity purchases for investors from underwater owners on the chance of a short sale discount or who have a positive equity;
  • specializing in sales and leasing of a particular type of commercial property, other branch office locations and alternative marketing approaches (aside from social media);
  • providing mortgage loan broker services for business-investor loans made by private lenders and secured by the borrower’s residence (no mortgage loan origination (MLO) endorsement required);
  • arranging carryback financing and the take over/assumption of existing mortgages, and buying and selling those carryback trust deed notes;
  • negotiating options to buy, or lease with option to buy when inventories expand as the shadow inventory of speculators returns to be sold;
  • exchanging properties with equity to help owners relocate their wealth held in real estate tax free; or
  • using barter credits in lieu of greenbacks, etc.

Homebuyers and those who facilitate the home buying process will endure this decrease in home sales volume for about another year. There will be a significant increase next year in 2018, and from around 2019-2021 volume numbers will peak again.

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