Recent Tech Layoffs Exacerbate Decline in California Home Sales and Prices
In January 2023, California home sales experienced a slight uptick for the second consecutive month, yet they plummeted by 45.7 percent compared to January 2022, as reported by the California Association of Realtors (C.A.R.).
Closed escrow sales of existing, single-family detached homes in California reached a seasonally adjusted annualized rate of 241,520 in January, based on data compiled by C.A.R.
This annualized rate reflects the projected total number of homes sold in 2023 if sales continue at the same pace as January. While January’s sales pace increased by 0.4 percent from December’s revised figure of 240,630, it declined significantly by 45.7 percent compared to January of the previous year, which saw a revised annualized sales rate of 444,400 homes.
C.A.R. President Jennifer Branchini remarked, “Thanks to slightly waning interest rates and moderating home prices, California’s housing market showed signs of improvement in January, instilling greater confidence in buyers and offering a slightly improved affordability outlook.
She noted that although the monthly sales gains were modest over the past two months, the market is heading in a positive direction, with potential gradual improvements anticipated in the upcoming spring homebuying season.
In January, California’s median home price dipped to $751,330, marking a 3.0 percent decrease from December’s median of $774,850, which represented the fifth consecutive monthly decline.
Additionally, January’s median price registered a 1.9 percent year-over-year decrease from the $766,250 recorded in the same month of the previous year.
C.A.R. Vice President and Chief Economist Jordan Levine attributed the decline in sales and prices, particularly in higher-priced housing markets like the San Francisco Bay Area, to recent job layoffs, primarily within the tech sector.
Levine anticipated further softening in home prices due to ongoing downward adjustments, as sales continue to shift towards less expensive housing units throughout 2023.
California Housing Market Faces Significant Decline in Sales and Prices
The California Association of Realtors (C.A.R.) has released its January 2023 resale housing report, revealing substantial declines across various metrics:
Regional Sales Drop: All major regions in California experienced year-over-year sales drops exceeding one-third, with the Central Valley leading at -43.3 percent. Southern California followed closely with a drop of over 40 percent, along with the Far North, the San Francisco Bay Area, and the Central Coast.
County-Level Sales Decline: Every county tracked by C.A.R. witnessed a year-over-year sales decrease in January, with 45 counties plummeting more than 30 percent and 11 counties falling over 50 percent. Siskiyou, Mono, and Yuba experienced the largest sales drops.
Median Home Price Decline: Median home prices declined year-over-year in all major regions, with the San Francisco Bay Area recording the steepest double-digit decline of 14.6 percent. Other regions experienced more moderate declines, such as the Central Valley (-6.6 percent) and the Far North (-3.4 percent).
Home Price Fluctuations: Over four-fifths of counties saw a decline in home prices from the previous year, with 15 counties posting drops exceeding 10 percent. Plumas, Mendocino, and Del Norte had the sharpest declines, while a few counties recorded double-digit price increases.
Rising Housing Inventory: California’s housing inventory surged to its highest level in 32 months, with the statewide unsold inventory index reaching 3.6 months in January 2023. Inventory increased substantially across all price ranges, with notable growth in the $500,000-$749,000 and $1 million-and-up tiers.
Increased Active Listings: Weak housing demand led to a rise in active listings across most counties, with 48 out of 51 counties experiencing an increase from January 2022. Counties like Solano, Yuba, and Amador saw triple-digit yearly growth in active listings.
Days on Market: The median number of days it took to sell a single-family home in California was 33 days in January, compared to 12 days in January 2022.
Sales-Price-to-List-Price Ratio: C.A.R.’s statewide sales-price-to-list-price ratio was 96.5 percent in January 2023, down from 101.2 percent in January 2022.
Average Price per Square Foot: The statewide average price per square foot for an existing single-family home was $371 in January 2023, slightly lower than the $372 recorded a year ago.
Mortgage Interest Rate: The 30-year, fixed-mortgage interest rate averaged 6.27 percent in January 2023, significantly higher than the 3.45 percent recorded in January 2022, according to Freddie Mac.
These figures underscore the challenges facing California’s housing market, with declining sales, prices, and increased inventory signaling a significant shift in market dynamics.
