The Housing Markets In California are Starting To Stall

Housing Crisis

The pop culture indudtry in Hollywood, Los Angeles and the boom in the tech industry in San Jose’s Silicon Valley have for a long time made California a place where many Americans would love to own a home. However, according to research that was conducted by the California Association of Realtors, there are indications, and signs that the housing market in California has started to stall. In October this year, pending sales for homes dropped by 2.6%as compared to the same time in 2016.

This was a subtle sign that indicated where the housing market in California was headed. The state has seen a decline in this markets for the ninth time in only ten months. Moreover, in the ten-month period, the housing markets experienced a drop for four consecutive months.

A solid run of closed sales in the housing markets presided the months of May, June, and September this year. Home prices were inflated by the scarcity of home inventory that continued for the ten months. The most significant decrease in pending home sales was experienced in the San Francisco Bay area at 10.5% while there was a 7.3% drop in the areas of Southern California. However, the Central Valley saw an increase of 5.1%.

The report also said that the primary concern for home sellers in California was rising prices and the affordability of housing to more and more Americans. Before the financial crisis, the cost to own a home in San Francisco had inflated beyond the expected maximum. However, prices are just below those levels in Los Angeles. This data was collected by the S&P CoreLogic Case-Shiller National Home Price Index.

Inflated prices and precipitous drops in the sales of homes show that home prices are higher than what the prospective homeowner can afford or is willing to pay. A decrease in costs may follow when home sellers are trying to move home inventories. However, the primary problem is that the inventory will remain to be low. The survey by CAR showed that what brokers should be concerned about after rising prices was the available inventory. Little upward mobility is a significant factor behind homeowner’s unwillingness to sell their homes.

At best, selling a home by most citizens would be a sideways move at best. Although home sales are on the decline, they are outpacing the home’s supply, and this will continue to inflate the prices. House renters will continue to be priced out from any possibility of owning a home while those who already own a home will continue to stay put.