It’s hard to build, buy or sell a home in when ice coats the drive and below freezing winds discourage roof inspections. There’s no doubt this year’s endless winter have curbed construction and sales. However, sagging sales are not just a function of the nasty weather that will melt away with the first warm days.
If that were the case, how do you explain California?
In February, California sales were 18.9 percent below the average of 31,660 sales for all the months of February since 1988, according to DataQuick. An estimated 25,680 new and resale houses and condos sold statewide last month, down 0.6 percent from 25,832 in January and down 10.6 percent from 28,719 sales in February 2013, according to San Diego-based DataQuick.
PropertyRadar reported California single-family home and condominium sales fell 1.4 percent in February 2014 from January and declined 16.1 percent from February 2013. Last month marked the lowest February sales since 2008. “Rapid price increases and rising interest rates in concert with sluggish income and employment growth have slowed demand…” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “Tougher borrowing standards, elevated prices, increasing borrowing costs and historically low inventory continue to exert a drag on market activity.”
According to the California Association of Realtors. February marked the fourth straight month that sales were below the 400,000 level and the seventh straight decline on a year-over-year basis. Sales in February slipped 0.7 percent from a revised 363,930 in January but were down 13.7 percent from a revised 418,520 in February 2013. The statewide sales figure represents what would be the total number of homes sold during 2014 if sales maintained the February pace throughout the year. It is adjusted to account for seasonal factors.
“The slower sales in February reflects diminished housing affordability after three years of solid price increases and interest rates that are nearly a full percentage point higher than a year ago,” said C.A.R. President Kevin Brown. “With the interest rate difference alone, home buyers this year would have to pay $150 more per month on their mortgage payment than last year, a substantial amount for many would-be home buyers trying to get into the market.”
Affordability, access to credit, rising rates and fluctuating inventories are not unique to California markets. Will California once again be the nation’s real estate bellwether? When the sun finally shines in the North and East will sales still be at near-record lows?