Southern California saw the state’s biggest year-over-year increase in pending home sales last month, according to a new report.
Pending sales refer to sales in which a contract has been signed but the sale has not yet closed.
The California Association of Realtors’ Market Pulse Survey shows that pending sales in Southern California rose 7.8 percent in December compared with the same period a year earlier. That topped the Central Valley’s meager 0.9 percent gain and the 14.2 percent decline that was seen in the San Francisco Bay area.
That region’s downturn was driven by a tight inventory and low affordability, the report said.
San Bernardino County led Southern California with a 9.5 percent yearly increase in pending sales. That was followed by San Diego County (up 7.9 percent) and Los Angeles County (up 5.2 percent). Orange County was the only area in Southern California that saw a decline. Pending sales there fell 11.5 percent over the year.
“There’s still a lot of room for growth in San Bernardino County,” CAR economist Jordan Levine said. “Homes are much more affordable there relative to Los Angeles County and Orange County. The difference between the price of a home in L.A. and in San Bernardino County can be several hundred thousand dollars.”
Steve Grippi, a Realtor with Keller Williams in Irvine, said Orange County’s decline in sales last month was likely tied to the holidays. People may have been out buying Christmas gifts or doing other holiday-related activities, he said, prompting them to place home buying low on their list.
“It might be that people were just hanging out during the holidays and not working so much,” Grippi said. “And a lot of people in Orange County have more income so they can afford to take more time to buy a home.”
Other areas of the state fared much worse in CAR’s report.
San Mateo County posted a 35.3 percent annual decline pending home sales in December. Sales in San Francisco were off 23.3 percent and Santa Clarita County saw a yearly decline of 18.6 percent.
Still, the report also shows two other positive trends. The share of California homes selling for below asking price fell to 43 percent in December compared with 57 percent a year earlier. Conversely, the percentage that sold for more than the list price rose to 23 percent, up from 18 percent in December 2015. The remaining 34 percent sold at asking price, up from 25 percent in December 2015.
The top concern among the more than 10,000 Realtors who participated in the Market Pulse Survey was high home prices and housing affordability followed by a lack of available inventory.
A recent report from the California Department of Housing and Community Development shows that developers are building an average of 80,000 new California homes a year, far fewer than the 180,000 that are needed.
The department’s “California Housing Future: Challenges and Opportunities” report shows new home construction is being constrained by a variety of factors, including regulatory barriers, high permitting costs and diminishing public resources.
California will need more than 1.8 million additional homes by 2025 to keep pace with the state’s ever-growing population, according to the Department of Housing and Community Development and the state Department of Finance.
The CAR survey reveals that California’s limited housing inventory is fueling multiple offers. The share of properties receiving three or more offers in December rose to 40 percent compared with 36 percent in November.
Homes priced from $500,000 to $749,000 and from $750,000 to $999,000 experienced an increase of three or more additional offers, the survey said. But houses listed at $400,000 to $499,000 and $2 million and higher saw a drop of three or more offers.
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