The real estate market in Southern California and throughout the nation experienced price drops from December to January, which caused a wave of doubt looming over the recovery of housing market. But some experts are certain the market is headed in a positive direction and the slight bump in the road was a necessity.
“Those worried about another housing bubble in the California real estate market are ignoring the fact that in each of the past six months, California real estate sales have posted year-over-year declines,” Madeline Schnapp, director of economic research for PropertyRadar, told the Central Valley Business Times. “Increasing borrowing costs, elevated levels of negative equity, tougher borrowing standards and historically low inventory continue to exert a drag on market activity.”
Taking a closer look at the real estate market in California, the median sale price of a home fell 4.8 percent from December 2013 to January 2014, which was the largest monthly decline since January 2013. But this is generally the slowest time of the year and month-over-month declines aren’t something to get nervous about. Not only is it a time where potential home buyers concentrate on spending time with family and friends for the holidays, this year’s extreme weather throughout the nation put a damper on virtually every market.
Altos Research, a California-based real estate analytics company, posted the median single family home value for Los Angeles at $485,396 as of February 14. This is a decline from the start of the year when the median value was nearly at $526k. However, the median value began at a much higher price point in 2014 than it did in 2013 when it was well below the $438k mark. This shows that despite the month-over-month decline, prices are still increasing from a year-over-year standpoint.
Home Builder Confidence Slips
The National Association of Home Builders/Wells Fargo builder sentiment index was released February 18 and found that home builder confidence fell from 56 to 46, which is the lowest point since May. The reading shows that builders view conditions of the market as poor after the index was in the positive range since June. According to USA Today, the negative attitude is a reflection of the bad weather’s impact on the already slow season.
But again, most economists are still looking forward to a positive housing market throughout the nation this spring and throughout all of 2014. Despite the fact home construction slowed in December, it still finished out the year on its highest note since the housing bubble burst. A combination of new home sales and home seller confidence will kick the market into gear in areas like Los Angeles and the spring season will hold the key to the housing market recovery.
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(all data current as of 10/22/2017)
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