This article looks at home sales volume, and discusses California trends in homebuying and selling.
41,790 new and resale home transactions closed escrow in California during May 2012, up 18% from one year ago when 35,536 sales closed escrow, and up 9% from April 2012. For the past two years, home sales have moved on a “bumpy plateau,” with dramatic changes in sales volume from month to month, but little overall change.
Chart Last Updated 6/18/12
Data courtesy of Dataquick
All forecasts are made by Ready Realty based on current data, influential factors and market trends.
The above charts track the home sales volume of single family residences (SFRs) on a month-to-month and annual basis. This includes all resales and new homes in California, including new homes sold directly by the builder.
Recent sales numbers suggest the upcoming years through 2016 will be characterized by a bumpy plateau in home sales volume. Volume and prices fluctuated from month to month in 2011, with little overall gain in sales from the year before. A (short-lived) rise is expected in the first months of 2012, continuing a trend started by historically low prices and interest rates in late-2011.
Little overall change from 2010’s numbers will occur until California employment growth and homebuyer confidence show consistent improvement over a substantial period of time. For example, in 1994, when the economy began to rise from the recession of 1991, it took 24 consecutive months of improved job numbers for the housing market to respond with increased sales volume.
Current trends in jobs and consumer confidence do not suggest any equivalent improvement in sales volume is imminent. At the time of this writing, 30% of all homeowners cannot sell and relocate because their homes are worth significantly less than the debt encumbering them. Worse, lenders are reluctant to consent to any discounts on short sale payoffs when sellers are even remotely capable of paying on the loan.
Ready Realty forecasts home sales volume will return to the 2006 levels around 2017-2018. The peak sales volume last seen in 2004, inflated by speculator acquisitions, may never return at all.
Relocating Baby Boomers going into retirement later this decade will be the primary propelling force in both selling homes and buying replacements. Their Generation Y (Gen Y) children will add to the sales volume as they become first-time homebuyers whose influence will peak at the end of this decade.