California home sales uptick 6 percent annually in January
World Property Journal
Softening mortgage rates and an increase in new, active listings allowed the number of successful homebuyers to jump in January by 14.4 percent compared to December and 5.9 percent compared to January 2023, according to new data from the CALIFORNIA ASSOCIATION OF REALTORS®. Closed escrow sales of existing, single-family detached homes in California totaled 256,160 last month.
“The increase in new active listings for the first time in 19 months was great news for the California housing market,” said C.A.R. Senior Vice President and Chief Economist Jordan Levine. “In general, rates are expected to decline later this year, and available inventory should slowly improve throughout 2024.”
First-time homebuyers are making waves
MPA Mag
LendingTree has reported that first-time homebuyers accounted for the majority of the mortgage offers that were given to borrowers on its platform last year. Nationwide, about 65 percent of the offers made in 2023 went to individuals purchasing a home for the first time, and first-time buyers accounted for more than half of all mortgage offers in every state.
The reason why first-time buyers dominated last year’s housing market is likely due to their lack of existing mortgage commitments, according to LendingTree Senior Economist Jacob Channel. The higher rate environment left existing homeowners reluctant to move away from their lower, locked-in rates, especially in states like California and New York, where housing costs are steep.
Where is homeownership highest in California?
The Sun
According to U.S. Census data comparing homeownership rates from 2023 with pre-pandemic 2019, California’s Inland Empire ranked highest in the state, with 70.7 percent of homes occupied by owners. This is an increase of 6.3 percent since 2019. The Inland Empire’s housing market benefitted from its relatively affordable housing – single-family homes averaged $562,000 last year – as well as from increased inventory. Nineteen percent of the state’s building permits for the last four years were located in the Inland Empire.
Homeownership in Sacramento also grew from 61.7 percent in 2019 to 64.4 percent in 2023. San Francisco’s ownership rate nudged up from 52.8 percent to 55 percent, and San Jose’s rose from 52.5 percent to 53.5 percent. Fresno’s homeownership rate climbed from 49 percent to 54 percent, while Los Angeles’s rate of 48 percent stayed nearly flat.
Want a largely risk-free California home purchase? Own it for 12 years
Lake County Record-Bee
Buying a home is generally a long-term investment, but how long does one need to keep a home in order to increase one’s odds of seeing the price increase? This op-ed discusses analysis by a Southern California business columnist, Jonathan Lansner, of home price trends in the state since 1987.
He found that while the majority of one-year, two-year, four-year, or even eight-year periods yielded price increases, 30 percent of one-year periods saw prices fall, and 27 percent of four-year periods also showed decreases. Even owning a house for eight years wasn’t foolproof because 21 percent of eight-year periods saw prices decrease (while 79 percent saw prices rise, even as much as 61 to 214 percent). Since 1987, Californians who owned a home at least 12 years saw no price declines, and the average price gain was 94 percent. There’s no guarantee that this historical trend will predict the future, but it reinforces the benefit of thinking long-term.
Existing home sales rose 3 percent in January, but demand slows with higher mortgage rates
CNBC
Sales of previously owned homes rose 3.1 percent nationally in January to 4 million units, according to the NATIONAL ASSOCIATION OF REALTORS®. The count is based on closings, so the contracts were likely signed in November and December, when mortgage interest rates backed off their October high of 8 percent. Today, they are back over 7 percent, according to Mortgage News Daily.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less on average) increased to 7.06 percent from 6.87 percent, with points rising to 0.66 from 0.65 for loans with a 20 percent down payment. According to the Mortgage Bankers Association’s seasonally adjusted index, applications to refinance a home loan dropped 11 percent last week compared with the previous week and were just 0.1 percent higher than the same week one year ago. Applications for mortgages to purchase a home fell 10 percent for the week and were 13 percent lower than the same week a year ago.