California’s housing market is lifting itself up to more healthy, sustainable numbers, according to real estate experts, as the share of equity home sales continued to grow in July. Meanwhile, distressed sales have fallen to half of what they were a year ago.
“The increase in the share of equity sales reflects a market that is fully transitioning from investor purchases of distressed homes to primary home purchases by households. The market continues to improve as more previously underwater homes gain equity due to recent upward movement in prices,” said Leslie Appleton-Young, vice president and chief economist of the California Association of Realtors. “As a result, we’re seeing a significant decline in the supply of short sale and bank-owned properties.”
According to the latest report from the state group, the share of equity sales statewide has continued to rise for 17 of the last 18 months and accounted for more than four in five sales, the highest share since December 2007. The share of equity home sales increased to 82.9 percent of total home sales in July, up from 79.9 percent in June. Equity home sales made up 59.2 percent of total sales in July 2012.
Combined share of all distressed property sales consequently dropped in July, down to just 17.1 percent, from 20.1 percent in June and down from 40.8 percent in July 2012. The share of short sales in the state fell in July to the lowest level since April 2009 at 11.6 percent, down from 12.9 percent in June and 22.7 percent of all sales the same month last year. REOs made up only 5 percent of all sales, down from 6.6 percent in June and from 17.7 percent in July 2012. The July 2013 figure was the lowest since September 2007.
Twenty-five of the 38 reported counties showed a month-to-month decrease in the share of distressed sales, with San Mateo and Santa Clara each recording the smallest share at 4 percent. In both counties single-family distressed home sales made up 7 percent in the previous month. In July 2012, distressed home sales accounted for 23 percent of all home sales in Santa Clara County and 15 percent of all home sales in San Mateo County.
Both counties posted price gains early in the recovery, with their economies improving due to the job growth in the tech industry, according to Carolyn Miller, president of the Silicon Valley Association of Realtors.
“With Facebook, Google, Yahoo, Apple and other tech companies based in the area expanding and hiring employees, the recovery was bound to hit Silicon Valley sooner than most areas. We saw home prices escalate faster. They are still rising, but not at as fast a pace. We are seeing the market become more sustainable,” said Miller.
Information in this column is presented by the Silicon Valley Association of Realtors at silvar.org. Send questions to rmeily@silvar.org.
