California Real Estate Market Snapshot – January 2011

Now that we have rolled into 2011, we can take a look back to 2010 to determine what type of real estate year it was. The year 2010 started off fairly robust due to the Federal First Time Home Buyer Credit. Looking back, we can clearly state that the Federal First Time Home Buyer’s Credit did spur on the market—at least for a while. Qualified buyers had until April 30, 2010 to enter escrow and until September 30 to close the escrow if they wished to receive credit of up to $8,000; so, as would be expected, buyers had an incentive to beat this deadline. This had a similar effect to that of a store offering a big sale. Sales would increase through the sale dates and, of course, would significantly drop off after the sale. This is exactly what happened—the market was much stronger through September, followed by a much slower fourth quarter. The Great Recession of 2007 to 2009 led to many foreclosures and also made qualifying for a home more difficult. Therefore, more Americans became renters, thus driving rental prices up by 11.6% in 2010. The increased rents are bringing investors back into the market and are also making homeownership more attractive to renters. The Housing Affordability Index, which is based on housing prices and interest rates, has increased by 54.7%. With higher rental prices, an increased Housing Affordability Index, and the release of more bank-owned properties into the market, 2011 looks to be a promising year for California real estate.

Market Report

January, 2011 Current
Period
Last
Period
Last
Year
Month-to-Month
Change
Year-to-Year
Change
Existing Home Sales 490,950 449,480 536,940 9.2% -8.6%
Median Home Price $296,820 $304,220 $304,550 -2.4% -2.5%
Unsold Inventory Index 6.2 months 6.5 months 4.5 months -4.6% 37.8%
Median Days On Market 54.7 53.4 33.1 2.4% 65.3%
30-Year Fixed Mortgage 4.30% 4.23% 4.88% 0.07% -0.58

Source: California Association of REALTORS®

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