Sales of existing homes remained muted statewide in April with the start of the spring homebuying season, according to the latest housing market report for home sales and prices from the California Association of REALTORS® (C.A.R).

Existing home sales in California in April 2019 was 4.8 percent lower than in April 2018. By contrast, in San Diego County, our year-over-year existing home sales for April 2019 climbed by 2.4 percent since last year.

April’s statewide seasonally adjusted sales figure of 396,760 units was down 0.1 percent from the 397,210 level in March and down 4.8 percent from home sales in April 2018 of 416,750. Sales remained below the 400,000 level for the ninth consecutive month and have fallen on a year-over-year basis for a full year. The statewide annualized sales figure represents what would be the total number of homes sold during 2109 if sales maintained the April pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

“Weak buyer demand, largely prompted by elevated home prices, is playing a role in the softening housing market,” said C.A.R. President Jared Martin. “However, with low interest rates, cooling competition and an increase in homes to choose from, buyers can take advantage of a more balanced housing market.”  

Even as demand weakened and home sales stumbled, the statewide median home price set another record high in April, hitting $602,920 and surpassing the previous high of $602,760 set last summer. April’s price was up 6.5 percent from $565,880 in March and up 3.2 percent from a revised $584,460 in April 2018. The year-over-year price growth rate was the strongest since October 2018.

In San Diego County in April 2019, the median single-family home sales price of $649,000 was 4 percent higher than the $623,800 sales price compared to March 2019 and 2.2 percent higher than the $635,000 figure in April 2018.

“While we started off the spring homebuying season on a down note, home sales in the upcoming months may fare better than the top-level numbers suggest,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “The year-over-year sales decrease was the smallest in nine months, and pending home sales increased for the second straight month after declining for more than two years. While we don’t expect a sharp sales rebound, we also don’t expect an acceleration in declines.”

Other key points from the April 2019 resale housing report included:

-- The median number of days it took to sell a California single-family home is increasing. Time on market fell from 25 days in March to 21 days in April as the homebuying season got underway. However, it took a median number of 15 days to sell a home in April 2018. Meanwhile, in San Diego County, the median number of days a home remained unsold on the market stood at 17 days in April 2019, compared to 19 days in March 2019, 22 days in February 2019 and 11 days in April 2018.

-- The median home price increased from a year ago in all regions statewide except the San Francisco Bay Area. Of the entire, nine-county Northern California region, only Napa County posted an increase in April of 3.3 percent, while San Mateo, Santa Clara and Sonoma recorded the largest price declines of 9.5 percent, 7.7 percent and 5.8 percent, respectively.

-- Conversely, home prices rose on a year-to-year basis across Southern California, with the exception of Ventura County, which was down 2.3 percent. Price growth remains strongest in the Inland Empire, where homes are most affordable, with prices in both Riverside and San Bernardino counties increasing more than 5 percent.

-- Encouragingly, the growth in active listings from the year prior decelerated for the fourth straight month. The number of homes available for sale increased only 10.8 percent from last April, but still enough to provide a much-needed supply of homes for sale. The growth in active listings has fallen from more than 30 percent at the end of 2018 suggesting that the market is becoming more balanced, rather than experiencing a full-scale exodus of sellers in California.

-- The Unsold Inventory Index (UII), which is a ratio of inventory over sales, dipped on a month-to-month basis but edged up on a year-over-year basis. The Unsold Inventory Index was 3.4 months in April, down from 3.6 months in March but up from 3.2 months in April 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate. The jump in the UII from a year ago can be attributed to the moderate sales decline and the sharp increase in active listings.

-- The 30-year, fixed-mortgage interest rate averaged 4.14 percent in April, down from 4.47 percent in April 2018, according to Freddie Mac. The five-year, adjustable mortgage interest rate increased in April to an average of 3.75 percent from 3.66 in April 2018.

In other recent real estate and economic news, according to news reports:

-- According to CoreLogic real estate information service, the median price of a San Diego County home held steady in April, compared to the same month a year ago. The median price of a San Diego County home was $570,000 in April, the same as April 2018. In the past 12 months, the median hit a peak of $584,750 in August and a low of $532,000 in January. A total of 3,593 homes were sold in the county, down 3.4 percent from 3,718 during the same month a year ago. Still, that’s up from the past 11 months, which have seen an average drop of 12 percent.

-- A total of 20,074 new and resale houses and condos changed hands in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month, said CoreLogic. That was up 11.6 percent from 17,985 in March, and down 3.3 percent from 20,766 in April 2018.

-- According to the latest S&P CoreLogic Case-Shiller report, existing home price increases continue to slow both nationally and in San Diego County. The 20-city composite index checked in with a year-over-year gain of 2.7 percent in March, down from a year-over-year gain of 3 percent in February. San Diego County’s price increase only climbed 1.3 percent year-over-year in March. San Diego metro prices gains were the lowest in the nation for fourth month in a row on the 20-city index.

-- Nearly half of San Diego County’s largest working group are considering leaving in the next two years. Forty-four percent of the region’s working millennials said they are considering leaving, with the primary reason being housing costs, said a recent survey from the San Diego Regional Chamber Foundation. In partnership with the City of San Diego, Sempra Energy and others, the researchers interviewed 397 San Diego County working millennials for the report. The purpose of the study was to identify millennial working habits, and how employers could make their experience more satisfying. But, the chamber acknowledged the answers about leaving were among the most dramatic findings. Millennials, roughly ages 23 to 38, make up 39.7 percent of San Diego County’s workforce. It is followed by Generation X, 39 to 54 years old, at 31.6 percent, and baby boomers, 55 to 73 years old, at 22.1 percent.

-- San Diego posted the eighth largest population increase between July 1, 2017 and July 1, 2018, among cities with populations of 50,000 or more, according to the U.S. Census Bureau. During the 12-month period, the population of “America’s Finest City” grew by 11,549 people, a near 1 percent increase from the previous year. Phoenix saw the largest population increase in the country during the period, adding 25,288 people. San Diego was the only city in California to make the top 10 for largest population gains in the latest report, while Texas had four cities make the top 10. San Antonio and Fort Worth ranked second and third in population growth, rising by 20,824 and 19,552, respectively.

-- The personal income of residents in the San Diego metropolitan area grew by 2.3 percent, below the national average, from 2016 to 2017, said the Bureau of Economic Analysis. That was below the nationwide increase of 2.6 percent. Real personal income is a catch-all way of looking at how much money Americans earn in a year. Among the largest metro areas with a population of more than 2 million, New York-Newark residents had the biggest increase at 4.3 percent, and Los Angeles-Anaheim had the least at 1.6 percent.

-- San DiegoCounty's unadjusted unemployment rate dropped to an even three percent in April 2019, with both farm and nonfarm industries showing job gains, according to the California Employment Development Department (EDD). The April rate, down from a revised 3.6 percent in March and a tick below the April 2018 rate of 3.1 percent, is at its lowest point since May 2018. The educational and health services industry added 7,600 jobs from April 2018 to last month, the highest year-over-year gain of any industry. Government and manufacturing jobs each increased by more than 3,000 jobs. The trade, transportation and utilities industry showed the largest year-over-year job decrease, losing 2,800 jobs. The information and financial activities industries also lost 500 and 100 jobs, respectively.

CHANGE THE LANDSCAPE OF YOUR REAL ESTATE BUSINESS - GO GLOBAL!

EVENT DATE & TIME
August 2, 2019
1:00 PM - 4:00 PM

EVENT LOCATION
PSAR | South Service Center
880 Canarios Ct. #100
Chula Vista, CA 91910

BUILDER FORUM
- Meet Builders, Brokers & Agents from other Countries
- Learn and earn as you Network with International Agents
- Enjoy Free Food & Live Music

FREE TO ATTEND | RSVP REQUIRED
1PM - 2PM ......... Forum Begins
2PM - 4PM ......... Food & Networking

SPONSORED BY 
- PSAR Global Real Estate Council
- Pacific Southwest Association of REALTORS®

Last Years Event

 

 

The lowest mortgage interest rates in more than a year boosted California’s housing market and kept home sales level in March 2019, after a stronger performance the previous month, according to the latest housing market report for home sales and prices from the California Association of REALTORS® (C.A.R).

After hitting the lowest level in 12 months in February 2019, the statewide median home price bounced back and reached the highest point since October 2018. The statewide median home price rose 5.9 percent to $565,880 in March 2019 from $534,140 in February 2019 and was up 0.2 percent from a revised $564,820 in March 2018.

The statewide median home price in March 2019 was $565,880, down 5.9 percent from February’s $534,140 figure and up 0.2 percent from March 2018’s figure of $564,820.

In San Diego County in March 2019, the median single-family home price of $623,800 was 0.2 percent lower than the $6250,000 figure for February 2019 and 0.3 percent lower than the $62,400 figure for March 2018.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 397,210 units in March, according to information from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2019 if sales maintained the March pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

“The lowest interest rates in more than a year gave would-be buyers the confidence to enter the housing market and provided a much-needed push to jump-start the spring homebuying season,” said C.A.R. President Jared Martin. “Pending sales also showed healthy improvement in March, which suggests a brighter market outlook could be in place in the second quarter.”  

“The median price has been softening since it reached a peak last summer, and March’s year-over-year price increase was the smallest in seven years,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “The flattening home prices, coupled with low mortgage rates, bode well for housing affordability and may bring more buyers who may have given up back to the market.”

Other key points from the March 2019 resale housing report included:

-- The median number of days it took to sell a California single-family home rose from 16 days in March 2018 to 25 days in March 2019. This compares to 33 days in February 2019 and 37 days in January 2019. Meanwhile, in San Diego County, the median number of days a home remained unsold on the market stood at 19 days in March 2019, compared to 22 days in February 2019 and 12 days in March 2018.

-- Home sales in the Inland Empire declined 10.4 percent from a year ago as Riverside and San Bernardino counties posted annual sales declines of 9.3 percent and 12.2 percent, respectively. In the Southern California region, home prices increased in San Bernardino, Riverside and Ventura while they declined in Los Angeles, Orange and San Diego counties.

-- Active listings continued to climb from the prior year, increasing 13.4 percent from last March. It was the 12th consecutive month active listings rose year-over-year and the ninth month in a row they grew double digits from the prior year. The pace of increase, however, was the slowest since July 2018, and the growth rate has been decelerating since December 2018.

-- The Unsold Inventory Index (UII), which is a ratio of inventory over sales, improved on a year-over-year basis but decreased on a month-to-month basis. The Unsold Inventory Index was 3.6 months in March, down from 4.6 months in February but up from 3.0 months in March 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate. The jump in the UII from a year ago can be attributed to the moderate sales decline and the sharp increase in active listings.

-- The 30-year, fixed-mortgage interest rate averaged 4.27 percent in March, down from 4.44 percent in March 2018, according to Freddie Mac. The five-year, adjustable mortgage interest rate also declined in March to an average of 3.83 percent from 3.65 in March 2018.

In other recent real estate and economic news, according to news reports:

-- The number of San Diego County homebuyers who had their first offer accepted skyrocketed in the first quarter of this year, according to real estate firm Redfin. In the first quarter last year, only 38 percent of local homebuyers got their first offer accepted. That figure climbed to 53.4 percent in the first three months of 2019. Nationally, 56 percent of homebuyers got their first offer accepted in the first quarter, according to Redfin, the highest first offer acceptance rate in the past three years.

-- San Diego County's home inventory rose 20.4 percent year-over-year in March, significantly outpacing the national inventory growth of 1.2 percent, according to a recent Zillow report. Zillow said the increase is not because there are many new listings, but rather homes are staying on the market longer. Despite an increase in the total pool of for-sale inventory, the number of new listings on the housing market has fallen year-over-year in each of the past four months, Zillow said.

-- Median home prices were unaffordable to 71 percent of average wage earners in the U.S. in the first quarter. According to Attom Data Solutions latest report, median home prices in the first quarter of 2019 were not affordable for average wage earners in 335 of 473 U.S. counties analyzed in the report. Attom said San Diego County's annualized weekly average wage figure of $61,269 means an individual or family would have to spend 65.4 percent of their income to afford a median home price of $540,250. It's recommended that no more than a third of income should be spent on housing in any given month.

-- The number of San Diego County homes in foreclosure remains at a low level. Attom Data Solutions found local foreclosure filings amounted to 1,040 in the first quarter. While it marked a 280-unit quarter-over-quarter decline, it was up by nearly 150 foreclosures from a year ago. Foreclosures both in San Diego and nationally are still at or near 11-year lows.

-- Millennials are struggling to come up with a down payment to pay for a home, according to Clever Real Estate, a referral service. Nearly half of Californian millennials pay less than the traditional 20 percent down on a home. This leads to high monthly payments and, sometimes, buyer’s remorse. Also, a lack of funds to start with means many use credit cards, or loans, for home renovations.

-- San Diego County is the seventh most favored rental market in the nation. According to HotPads, monthly rent in San Diego County, combining both single-family units and apartments, has reached $2,740. Chicago, Los Angeles and Atlanta are currently the most popular rental markets in the United States, said HotPads.

-- The unemployment rate in San Diego County was 3.7 percent in March, edging up from a revised 3.5 percent in February, according to a monthly jobs report from the California Employment Development Department. During the same period, the unadjusted unemployment rate was 4.6 percent for California and 3.9 percent for the nation.

-- California’s population growth in 2018 was the slowest in state history, as births declined, student enrollment fell and the death rate continued to climb as baby boomers aged. According to the state Department of Finance, the state added 186,807 residents last year, bringing California’s estimated total population to 39,927,315 people as of Jan. 1. The overall growth rate slipped to .47 percent last year from .78 pecent in 2017, the slowest since data collection started in 1900. Births in the state in 2018 were down by more than 18,000, compared with the previous year.

Sign up, and be a part of PSAR’s Leadership by becoming an Officer or Director.

PSAR's Nominating Committee is seeking Nominees for:

• President-Elect
• Secretary/Treasurer
• Director (There are 5 Director positions available)
• Deadline for Submission:  April 30, 2019 (5 PM)

 

Are you interested in becoming a Director of the California Association of REALTORS® representing PSAR for 2020?

• Are you active in the Real Estate industry?
• Are you an agent, manager, or Broker/Owner.
• Are you active in residential resale, commercial or property management?
• Take this opportunity to share your knowledge and make a difference.
• Deadline for Submission: April 30, 2019 (5 PM)

 

Congratulations to members of the PSAR Governmental Affairs Committee. Their recent efforts were rewarded this past week with two major victories before the La Mesa City Council on Feb. 26 and the San Diego County Board of Supervisors on Feb. 27.

On the dockets of both governmental bodies was the hot topic of Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs), commonly referred to as “granny flats.”

PSAR is in favor of property owners who want to expand the use of their property by building granny flats on lots with existing homes as a way to address the region’s housing supply and affordability crisis.

Granny flat units, typically smaller than standard homes, are second homes built on the same lot as an existing single-family house. Often, these secondary units are constructed by homeowners in backyards or above garages of single-family residences. They can be used for family members or rented out as a source of income for homeowners.

Granny flats also represent perhaps the easiest and quickest way to provide additional affordable housing options to local residents. When it comes to housing that will help all of San Diego, PSAR is in favor of making the ADU regulations more streamlined so homeowners can cut through the thick red tape of processing the construction of new, smaller rental units.

Current state regulations allow granny flats to be up to 1,200 square feet in size. They can be attached to, or built separate from, full-sized homes on the same parcel. They can include kitchens, bathrooms, living areas and private entrances. They cannot be sold as individual homes, but they can be rented out by homeowners or used to provide additional living space for family members, friends, students, the elderly, the disabled or in-home health care providers. Properties must meet all zoning requirements, such as setbacks that meet fire safety and building codes.

Speaking at the recent La Mesa City Council meeting on behalf of PSAR were Robert Calloway, 2019 PSAR President, Rebecca Pollack-Rude, co-chair of the PSAR Governmental Affairs Committee and Tracy Morgan Hollingworth, PSAR’s Government Affairs Director. Before a packed Council chamber, the La Mesa Council members were considering changes to simplify their secondary unit ordinance.

With the approval of PSAR, the La Mesa City Council unanimously adopted on first reading the following ADU guidelines (all of these were recommended by PSAR):

-- Allow ADUs to be built on any property with an existing single-family home or where a single-family home is permitted to be built.

-- Allow ADUs on properties with existing duplexes.

-- Preserve historical resources by requiring ADUs to be behind any historic properties.

-- Allow ADUs to be up to 1,200 square feet, regardless of the size of the primary.

-- No requirements to record covenants on property associated with ADUs.

-- No expensive dedication of right of way improvements for properties investing in ADUs.

-- Streamlined ministerial approval, including in overlays areas that usually require discretionary review.

Robert, Rebecca and Tracy told La Mesa City Council members that ADU development will encourage property owners who want to better utilize their homes in order to provide living quarters to students, seniors and others on fixed incomes who want a decent place to live.

La Mesa’s new set of regulations for granny flats will, in some cases, make the city’s rules more lenient than state requirements. A second reading for La Mesa’s ordinance will be heard March 5 before the new rules will take effect 30 days later.

A second victory this past week occurred at the February 27th Board of Supervisors meeting. The Supervisors were considering similar changes to conform to the state law in order to pave the way for more ADUs. The Board was considering a requirement for their ADU code to require owner occupancy for one of the buildings on a lot, which PSAR was recommending against.

Fortunately, the good news is that the Supervisors decided to remove the owner-occupancy requirement following testimony from PSAR’s Tracy Morgan Hollingworth.

Tracy said both La Mesa and County officials were grateful for PSAR’s assistance and guidance on their ADU policy decisions. In both instances, it was a victory to provide more housing at what could be an affordable price and provide seniors and families additional income to make ends meet from ADU unit rentals.

PSAR will work with both La Mesa and the County to help homeowners know how to process ADU units in local workshops so homeowners can bring their ideas to local government officials and see if their property can accommodate a new ADU.

 “I’m very proud that both government bodies went with our recommendations,” said Robert Calloway, PSAR President. “I don’t know of any other local real estate organization that gave their support to these local jurisdictions.”

“I am proud of be part of PSAR and the role we played with the ADU ordinances,” said Ditas Yamane, co-chair, Governmental Affairs Committee. “ADUs are smart growth tools for providing access to more affordable housing. They’re part of the solution in response to changing households. Removing ADU regulatory barriers is a benefit to our entire community. There is a housing crisis going on and we cannot look away.”

“There is not much build-able land in La Mesa and ADUs are  a good fit to help the housing crisis and keep San Diegans in San Diego and not moving out of the state,” said Rebecca Pollack-Rude, co-chair, Governmental Affairs Committee.  

PSAR members also have worked closely with the City of Chula Vista to reduce ADU fees and streamline their regulations. In January 2019, the County Board of Supervisors voted to waive fees for homeowners building accessory units on their property. Last May, the City of San Diego voted unanimously to slash ADU granny flat building fees by more than 60 percent.

California home sales fell to the lowest level in more than 10 years in January 2019, according to the latest housing market report for home sales and prices from the California Association of REALTORS® (C.A.R). Housing demand in the state remained subdued for the ninth consecutive month in January as economic and market uncertainties sent home sales to their lowest level since April 2008, said C.A.R.

Existing, single-family home sales statewide totaled 357,730 in January on a seasonally adjusted annualized rate, down 3.9 percent from the revised 372,260 in December and down 12.6 percent from January 2018 of 409,520. January marked the ninth consecutive month of decline and the sixth month in a row that sales were below 400,000, dipping to the lowest level since April 2008.

Sales in San Diego in January 2019 were down 17 percent from December and 10 percent lower from January 2018, according to C.A.R.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 357,730 units in January, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2019 if sales maintained the January pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

“California continued to move toward a more balanced market as we see buyers having greater negotiating power and sellers making concessions to get their homes sold as inventory grows,” said C.A.R. President Jared Martin. “While interest rates have dropped down to the lowest point in 10 months, potential buyers are putting their homeownership plans on hold as they wait out further price adjustments.”

C.A.R. said the statewide median home price declined to $538,690 in January 2019, which was down 3.4 percent from $557,600 in December and up 2.1 percent from a revised $527,780 in January 2018.  

In San Diego County in January 2019, the median home price was $610,000, which was 1.4 percent lower than the $618,500 figure for December 2018 and 3.4 percent higher than the $590,000 figure for January 2018.

“While we expected the federal government shutdown during most of January to temporarily interrupt closings because of a delay in loan approvals and income verifications, the impact on January’s home sales was minimal,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “The decline in sales was more indicative of demand side issues and was broad and across all price categories and regions of the state. Moreover, growing inventory over the past few months has not translated into more sales.”

Other key points from C.A.R.’s January 2019 resale housing report included:

-- The median number of days it took to sell a California single-family home rose from 27 days in January 2018 to 37 days in January 2019, compared to 32 days in December 2018. Meanwhile, in San Diego County, the median number of days a home remained unsold on the market rose from 21 days in January 2018 to 28 days in January 2019, compared to 27 days in December 2018. 

-- Statewide active listings rose for the 10th consecutive month in January after nearly three straight years of declines, increasing 27 percent from the previous year. All major regions recorded an increase in active listings, with the Bay Area posting the highest increase at 57 percent, followed by Southern California (29.7 percent), Central Valley (19.5 percent) and the Central Coast (14.5 percent).

-- The Unsold Inventory Index (UII), which is a ratio of inventory over sales, increased year-to-year from 3.6 months in January 2018 to 4.6 months in January 2019. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate. The jump in the UII from a year ago can be attributed to the double-digit sales decline and the sharp increase in active listings.

-- Forty of the 51 counties reported by C.A.R. posted a sales decline in January with an average year-over-year sales decline of nearly 19 percent. Twenty-eight counties declined by double-digits on an annual basis, and 10 counties experienced an increase in sales from a year ago.

-- The 30-year, fixed-mortgage interest rate averaged 4.46 percent in January, up from 4.03 percent in January 2018, according to Freddie Mac. The five-year, adjustable mortgage interest rate also increased in January to an average of 3.91 percent from 3.47 from January 2018.

In other recent real estate and economic news, according to news reports:

-- A new LendingTree report found that 63 percent of homebuyers in San Diego County last year shopped around for a mortgage before settling on a home. The report also found that just 39 percent of the buyers had good or excellent credit, and the typical down payment was 12 percent of the purchase price. LendingTree ranked the 50 largest metropolitan areas in the U.S. based on an average of the city’s rank in three categories that contribute to the competitiveness of homebuyers in an area. Based on shopping for a mortgage, credit and the down payment percentage, Denver, Los Angeles, and Portland, Ore., have the most competitive buyers in the country. Buyers in these areas have higher than average credit scores and the ability to put down a larger down payment.

-- San Diego's Real Housing Price Index declined at the fifth fastest rate nationwide in November 2018 at 0.1 percent, according to First American Financial Corp. While the decline may seem marginal, the rate of that drop was exceeded only by San Jose (with a 0.7 percent decline), Boston (0.4 percent), Portland, Ore. (0.2 percent) and Pittsburgh (0.2 percent). Seattle tied San Diego with a 0.1 percent decline. 

-- According to S&P CoreLogic Case-Shiller, San Diego’s home prices rose 3.32 percent in 2018, the third slowest of the 20 cities covered by the index. National home prices were up 5.2 percent in a year, with Las Vegas leading the pack with a 12 percent gain.

-- According to a Zillow report, San Diego County experienced the third-highest year-over-year jump in housing inventory in the U.S. in January. Zillow said San Diego saw its year-over-year “for sale” inventory climb 31.9 percent in January to 9,810 units. Inventory has increased the most in five West Coast markets, giving home shoppers more options and ever-so-slowly tilting the market toward buyers, Zillow said. On an annual basis, inventory grew 42.9 percent in San Jose, 36.9 percent in Seattle, 29.1 percent in Los Angeles and 25 percent in San Francisco.

-- Also according to Zillow, a declining percentage of existing homes have been selling above the asking price nationally and San Diego County is no exception. Zillow found that just 17.4 percent of existing homes in San Diego County sold above their asking price in November 2018, and just 16.4 percent sold above their asking price in December 2018. An average of 29.9 percent of existing homes sold above their asking price in San Diego County in 2017, while that number dropped to 25.7 percent in 2018, Zillow said.

-- According to Redfin, San Diego County was the third least affordable housing market in the U.S. for millennials in 2018. While the median household income for a San Diego millennial was $78,433, the median priced home was only affordable to 24.3 percent of those households, Redfin found.

-- Also according to Redfin, home affordability is declining in San Diego despite more inventory. Redfin reported there were 10 percent more homes for sale in San Diego County in 2018 compared to 2017, but the number of affordable homes for sale fell 16 percent. The number of homes affordable to a San Diego household earning the median income in 2018 dropped to 22 percent. Redfin also said more users conducted online searches for San Diego homes than searches by local residents for homes outside the county in 2018.

-- Quinnipiac University's recent California-specific poll, conducted Jan. 30 to Feb. 4, recently found that 43 percent of the 912 Californians surveyed said they don’t make enough money to live in the state. Also, Quinnipiac found that well over half of younger California voters, 61 percent of the respondents 18 to 34 years old, say they can’t afford to live in the Golden State.

-- The U.S. unemployment rate has dropped to 3.7 percent, the lowest in nearly 50 years, according to the Bureau of Labor Statistics. Also, average earnings rose 8 cents, to $27.24 per hour in September 2018.

Lower seasonal home prices allowed more Californians to afford a home purchase in the fourth quarter of 2018, compared to the previous quarter, but higher interest rates pushed affordability lower compared to the previous year, according to the California Association of REALTORS®’ (C.A.R.) “Housing Affordability Index” (HAI).

C.A.R. said 28 percent of California households could afford to purchase the existing $564,270 median-priced home in the fourth quarter of 2018, which was up from 27 percent in third quarter of 2018 but down from 29 percent a year ago.

In San Diego County, only 24 percent of local households could afford to purchase the $625,950 median-priced home in the 2018 fourth quarter, up from 23 percent in the 2018 third quarter but down from 26 percent a year ago. 

"Affordability has been challenging the past few years in San Diego County. We’re facing a soft market right now in San Diego as prices remain flat while some buyers are remaining on the sidelines,” said Robert Calloway, 2019 PSAR President. “However, the market fundamentals, such as job growth, income growth and household formation, are still strong. Mortgage rates are down slightly and buyers are looking for deals because the time on market has gone up which has increased the housing supply, but they're no longer fighting each other tooth and nail to get in the front door.”

C.A.R. said its index has been below 30 percent for six of the past eight quarters. California’s housing affordability index hit a peak of 56 percent in the first quarter of 2012.

C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. The index is considered the most fundamental measure of housing well-being for homebuyers in the state.

To afford to qualify to purchase the statewide median-priced, single-family home of $564,270 in the fourth quarter 2018, a household would need a minimum annual income of $122,340 to make the necessary monthly payments of $3,060. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, assumes a 20 percent down payment and an effective composite mortgage interest rate of 4.95 percent. The effective composite interest rate was 4.77 percent in third-quarter 2018 and 4.17 percent in fourth-quarter 2017. 

In San Diego County, C.A. R. said a minimum annual income of $135,710 would be needed to make monthly payments of $3,390 on a 4.95 percent interest rate mortgage loan.

“One of the biggest things with the affordability of homes here in San Diego is typically household income levels, but we’re in a more favorable position when compared to other markets like the Bay Area and the Silicon Valley,” said Calloway. “Too many builders have focused on luxury homes, and there hasn't been enough construction of affordable starter homes. Fortunately, recent inventory increases and the slowdown in house price appreciation is good news for home buyers.”

C.A.R. also said housing affordability for condominiums and townhomes edged up in fourth-quarter 2018 compared to the previous quarter with 37 percent of California households earning the minimum income to qualify for the purchase of a $460,000 median-priced condominium/townhome, up from 36 percent in the third quarter. An annual income of $99,730 was required to make monthly payments of $2,490. Thirty-eight percent of households could afford to buy a condominium-townhome a year ago.

Compared with California, more than half of the nation’s households (54 percent) could afford to purchase a $257,600 median-priced home, which required a minimum annual income of $55,850 to make monthly payments of $1,400.

Other key points from C.A.R.’s fourth-quarter 2018 Housing Affordability report included:

-- Housing affordability improved from fourth-quarter 2017 in 10 tracked counties and declined in 30 counties. Affordability in eight counties remained flat.

-- All but one county in the Southern California region posted a decrease in affordability compared to a year ago. Affordability declined in Los Angeles, Orange, Riverside, San Bernardino and San Diego counties. Only Ventura County recorded an improvement.

-- During the fourth quarter of 2018, the most affordable counties in California were Lassen (66 percent), Kern (53 percent) and Kings and Siskiyou (both at 50 percent). The minimum annual income needed to qualify for a home in these counties was $52,030 or less.

-- Mono (12 percent), Santa Cruz (12 percent), San Mateo (15 percent), San Francisco (15 percent) and Santa Clara (18 percent) counties were the least affordable areas in the state. San Francisco and San Mateo counties had the highest minimum qualifying incomes in the state. An annual income of $326,290 was needed to purchase a home in San Francisco County, and an annual income of $329,300 was required in San Mateo County.

PSAR members filled a packed room this week at the East County Service Center in El Cajon to look into the future and hear “2019 Housing Market Outlook,” a presentation from Oscar Wei, senior economist, California Association of REALTORS® (C.A.R.).

Wei told PSAR members that housing market conditions in California will continue soft in 2019 as prices remain flat and sales pull back throughout the year because buyers are expected to remain on the sidelines.

“The overall market will continue on a declining trend,” Wei said. “Many California consumers believe home prices will be flat or falling next year, and any growth will be at a very modest pace.”

Wei also said the interest rates, which recently dropped due to economic uncertainties, will eventually climb higher. In addition, if a second government shutdown occurs, similar to the recent 35-day partial shutdown which exacerbated partisan divisions, then the real estate market and U.S. economy could be negatively impacted.

According to Wei, current market fundamentals, including positive job growth, income growth and household formation, are still solid even though sales are down double-digits despite recent declines in interest rates. Meanwhile, price growth remains near its lowest levels since early 2012. Still, a window of opportunity is currently open for buyers, he said.

“Many buyers should buy now before interest rates climb higher in the near future,” said Wei. “Inventory levels are improving, yet a tight supply led to one third of sales closing above asking price in 2018. Fortunately, active listings increased for the ninth month in a row through November.

“The Fed has raised interest rates nine times since December 2015. If interest rates increase too fast, then economic growth will come to a halt.”

Wei also offered highlights from C.A.R.’s annual homebuyers survey, including:

• Most recent buyers ended-up compromising in some way, either by paying a higher price for a smaller home than desired or living a farther distance from work or schools.

• The reasons why most buyers delay buying sooner include saving for a down payment, waiting for finances to improve and prices to stabilize or difficulty qualifying for a mortgage.

• 80 percent of recent buyers had been saving for buy for more than one year.

• The net cash gain to sellers of roughly $200,000 has been the highest since 2006.

He said California cities are still not allowing construction of a sufficient supply of new homes: the California Department of Housing and Community Development projects that 180,000 new units are needed annually to keep up with demand.

Wei also discussed local market activity. In Chula Vista, 1,589 homes sold in 2017, compared to 1,407 in 2018, a decline of 11.5 percent. In El Cajon, 1,162 homes sold in 2017, compared to 1,133 in 2018, a decline of 2.5 percent. In San Diego County, 7,412 homes sold in 2017, compared to 6,774 in 2018, a drop of 8.6 percent.

The median price per city was as follows: Chula Vista -- $570,000 in 2017, $569,500 in 2018, a difference of 0.1 percent; El Cajon -- $530,000 in 2017, $575,000 in 2018, an increase of 8.5 percent; San Diego -- $640,000 in 2017, $695,000 in 2018, an improvement of 3.1 percent.

Wei concluded his remarks by saying seven out of 10 Americans still believe that owning a home is an important part of the American dream, and 45 percent of home shoppers plan to purchase within the next five years.

Below are a few links to go to for more statistical housing market resources.  These resources are for Realtor members and will require a CAR login. 

Data & Statistics                              https://www.car.org/marketdata/data

Housing Affordability Index       https://www.car.org/marketdata/data/haitraditional

Housing Matters Podcast             https://www.car.org/marketdata/podcast

Market Minute                                  https://www.car.org/marketdata/marketminute

County Market Updates               https://www.car.org/marketing/chartsandgraphs/marketupdate

Interactive Market Stats               https://www.car.org/marketdata/interactive

Market Snapshot                            https://www.car.org/marketing/chartsandgraphs/marketsnapshot

Housing Market Webinar             https://www.car.org/knowledge/multimedialibrary/webinars/market

Also, click here to view Oscar Wei's Presentation.

California home sales declined for the eighth straight month in December 2018, according to the latest housing market report for home sales and prices from the California Association of REALTORS® (C.A.R). The year finished with fewer sales for 2018 for the first time in four years. For the year as a whole, sales statewide were down 5.2 percent from 2017.

December’s sales figure was down 2.4 percent from the revised 381,400 level in November and down 11.6 percent from sales in December 2017 of 420,960. December marked the fifth month in a row that sales were below 400,000 and the lowest level of sales sold since January 2015.

Sales in San Diego in December 2018 were 7.4 percent lower compared to November 2018, and down 14.7 percent from December 2017.

“The housing market continued to shift in December and drift downward as sales have fallen double digits for the past three out of four months,” said C.A.R. President Jared Martin. “This trend is expected to continue, as buyers remain cautious about the murky housing market outlook due primarily to the volatility in the financial markets and uncertainty in the economic and political arenas.

“Additionally, housing markets in and around the wildfire areas have been exhibiting unusual patterns that could remain unsettled for the next few months. The impact, however, is confined mostly within the region and should not have a noticeable effect in the housing market at the state level.”

C.A.R. said the statewide median home price in December 2018 was $557,600, which was up 0.5 percent from $554,760 in November 2018 and up 1.5 percent from a revised $549,550 in December 2017. The statewide median home price for the year as a whole was $570,010, up 6.0 percent from $537,860 in 2017.

In San Diego, the median home price in December 2018 was $618,500, which was 1.2 percent lower than the $626,000 figure for November 2018 and 2.2 percent higher than the $605,000 figure for December 2017.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 372,260 units in December 2018, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the December pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

“California’s housing market in 2018 was hindered by endlessly rising home prices and interest rate hikes, which combined to erode housing affordability and hamper home sales,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “As a result, while the statewide median home price surpassed its previous peak and set a new record in 2018, annual home sales fell for the first time in four years to a preliminary 402,750 closed escrows in California, down from 2017’s pace of 424,890.

“In the coming months, we expect a brief hiccup in sales as the government shutdown temporarily delays closings due to interruptions in IRS income verification or the processing of HUD, VA and USDA loans,” said Appleton-Young.

Other key points from C.A.R.’s December 2018 resale housing report included:

• The median number of days it took to sell a California single-family home rose from 25 days in December 2017 to 32 days in December 2018. Meanwhile, in San Diego County, the median number of days a home remained unsold on the market was 27 days in December 2018, compared to 22 days in November 2018 and 18 days in December 2017.
• Statewide active listings rose for the ninth consecutive month after nearly three straight years of declines, increasing 30.6 percent from the previous year. All major regions recorded an increase in active listings, with the Bay Area posting the highest increase at 65 percent, followed by Southern California (34 percent), Central Valley (24 percent) and the Central Coast (12 percent).
• The Unsold Inventory Index, which is a ratio of inventory over sales, increased year-to-year from 2.5 months in December 2017 to 3.5 months in December 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.
• On a regionwide, non-seasonally adjusted basis, sales dropped double-digits on a year-over-year basis in the San Francisco Bay Area, the Central Coast, Central Valley and Southern California regions, with the Central Coast dropping the most at 24.9 percent.
• Thirty-nine of the 51 counties reported by C.A.R. posted a sales decline in December with an average year-over-year sales decline of 20 percent. Thirty-four counties recorded double-digit sales drops on an annual basis, and 10 counties experienced an increase in sales from a year ago.
• The 30-year, fixed-mortgage interest rate averaged 4.64 percent in December, up from 3.95 percent in December 2017, according to Freddie Mac. The five-year, adjustable mortgage interest rate also increased in December to an average of 4.02 percent from 3.39 from December 2017.

In other recent real estate and economic news, according to news reports:

• A new Zillow survey found that 27 percent of new homes in San Diego County experienced some price reduction in the fourth quarter, a 5 percent increase from the first quarter of 2018. Nationally, Zillow found that 25 percent of new homes experienced a price reduction in the fourth quarter, compared with 19.2 percent of homes in the first quarter of last year. Zillow said home shoppers nationwide may be able to find a better deal on a new home now than they could a year ago. Price cuts were more common in the fourth quarter than in the first quarter of last year, Zillow reported.
• CoreLogic recently reported that San Diego home prices were up 1.1 percent in November, after two months of decline. The real estate tracking company also said the median price in November was $565,000, which was $18,000 less than an all-time peak reached in August. 2018.
• The national economy is cooling but whether a recession is around the corner and how much a slowdown would affect the San Diego area is still an open question, according to local economists who met at the annual San Diego County Economic Roundtable at USD.
• San Diego County is one of the least affordable places to live in America, and renters know it. In 2017, 57 percent of the county’s renters were considered burdened by their housing costs, meaning they spent 30 percent or more of their income on rent and utilities. The figures come from data recently released by the Census Bureau’s American Community Survey. The problem is even worse for the 28 percent of renters in the county who spent more than half their income on rent and utilities in 2017. People with higher rent burdens are more likely to skip doctor appointments and avoid paying for medications, and they are less likely to save money.
• Demand for rental apartments has reached near record highs in San Diego, according to RealPage, a national property management and software company. San Diego was among 17 metro markets where apartment occupancy rates were at their highest in the third quarter of 2018, higher than they’ve been in the past 15 to 20 years. Occupancy rates in San Diego were the highest they’ve been in about 15 years, the company said.
• A new survey suggests a general dissatisfaction with the way things are going in California, mixed with politics to create a highly toxic brew. According to Competitive Edge’s recent poll of 806 likely voters, 15 percent of voters are seriously considering leaving and another 13 percent are giving it some thought.
• According to a recent survey from the Public Policy Institute of California, the 60 percent of respondents identified as likely voters are predicting that children growing up today in California will face a bleaker financial furniture than their parents. Sixty-seven percent of respondents said that the state was divided into haves and have-nots, and 45 percent considered themselves have-nots.
• San Diego County’s job market finished 2018 on a strong note. The local non-adjusted unemployment rate remained at a historic low of 3.2 percent in December, according to the California Employment Development Department. That’s unchanged from a revised 3.2 percent in November and below the 3.3 percent rate a year ago. The county lost 1,500 net positions in December. But year-over-year, payrolls added 28,400, up 1.9 percent.

What’s in store for the year ahead in the housing market?

The California Association of REALTORS® (C.A.R.) reports that a combination of high home prices and eroding affordability is expected to cut into housing demand and contribute to a weaker housing market in 2019.

C.A.R. is projecting a 3.3 percent decline in existing single-family home sales in 2019, down from a projected 410,460 in 2018 to 396,800 in 2019. The 2018 figure is 3.2 percent lower compared to the 424,100 homes sold in 2017.

“While home prices are predicted to temper next year, interest rates will likely rise and compound housing affordability issues,” said C.A.R. 2018 president Steve White. “Would-be buyers who are concerned that home prices may have peaked will wait on the sidelines until they have more clarity on where the housing market is headed. This could hold back housing demand and hamper home sales in 2019.”

C.A.R. also is forecasting growth in the U.S. gross domestic product of 2.4 percent in 2019, after a projected gain of 3.0 percent in 2018. With California’s nonfarm job growth at 1.4 percent, down from a projected 2.0 percent in 2018, the state’s unemployment rate will remain at 4.3 percent in 2019, unchanged from 2018’s figure but down from and 4.8 percent in 2017.

C.A.R. also predicts the average for 30-year, fixed mortgage interest rates will rise to 5.2 percent in 2019, up from 4.7 percent in 2018 and 4.0 percent in 2017, but will still remain low by historical standards.

Rising mortgage interest rates coupled with higher home prices in California is expected to mean that only 25 percent of households statewide will be able to afford a median-priced home in 2019, said C.A.R. If the past is any indication, the percentage of households that will be able to afford a single-family home in San Diego County next year will be even fewer.

The median home price statewide is forecast to increase 3.1 percent to $593,450 in 2019, following a projected 7.0 percent increase in 2018 to $575,800, according to C.A.R.

“The surge in home prices over the past few years due to the housing supply shortage has finally taken a toll on the market,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “Despite an improvement in supply conditions, there is a high level of uncertainty about the direction of the market that is affecting homebuying decisions. This psychological effect is creating a mismatch in price expectations between buyers and sellers and will limit price growth in the upcoming year.”

Outmigration, resulting from the state’s housing affordability issue, will also be a primary concern for the California housing market in 2019 as interest rates are expected to rise further next year. The high housing cost is driving Californians to leave their current county or even the state.

According to C.A.R.’s 2018 State of the Housing Market/Study of Housing: Insight, Forecast, Trends (SHIFT) report, 28 percent of homebuyers moved out of the county in which they previously resided in 2018, up from 21 percent in 2017.

The outmigration trend was even worse in the Bay Area, where housing was the least affordable, with 35 percent of homebuyers moving out because of affordability constraints. Southern California did not fare any better as 35 percent of homebuyers moved out of their county for the same reason, a significant jump from 21 percent in 2017. The substantial surge in homebuyers fleeing the state is reflected by the home sales decline in Southern California, which was down on a year-over-year basis for the first eight months of 2018.

Outmigration will not abate as long as home prices are out of reach and interest rates rise in the upcoming year, said C.A.R.