California is home to the most mortgage loan originators (MLOs) in the country, and always remains in the top tier for annual mortgage originations. If any loan officer, broker, real estate agent, or appraiser wants to expand their business, they can’t go wrong by getting a license to work in the Golden State. That’s why most mortgage professionals will be happy to know California’s housing market is maintaining a healthy sales pace above pre-pandemic levels, even as sales dip from last year’s record-highs.
According to the California Association of Realtors (CAR), October’s sale pace dipped 0.9% on a monthly basis from 438,190 in September and was down 10.4% from a year ago. Despite the fours consecutive years of sales decreasing, statewide home sales maintained a 13.4% increase on a year-to-date basis.
"As the housing market moves from 'frenzied' to 'less frenzied' and price growth comes back to earth, fewer homes are selling above asking price and bidding wars are less prevalent, so more buyers who pushed pause earlier this year will be able to take advantage of still-cheap financing," said 2022 CAR president Otto Catrina, a Bay Area real estate broker and Realtor. "With their median price being 30 percent less than that of a single-family home, condominiums and townhomes have been selling particularly well as they are a more affordable option to buyers with a smaller budget."
As the market moved further into the off-season, California home prices began to level off, dipping below the $800,000 benchmark for the first time in seven months. In October, the statewide median price was down 1.3% from September’s $808,890, but was up 12.3% from the $711,300 recorded in October 2020. This marks the second month-over-month decline in home prices, and the price drop between September and October is right on par with the average -1.5% recorded for the past 42 years.
"Despite a slowdown in sales from last year's robust fall season, the California housing market continues to stabilize and is outperforming the pre-pandemic levels observed in 2017, 2018, and 2019," C.A.R. vice president and chief economist Jordan Levine said. "Slower sales activity suggests that the market is returning to its typical seasonal pattern and further market normalization can be expected in the upcoming months. While the market is showing signs of cooling off in recent months, 2021 continues to outpace last year's sale level so far and is expected to post a gain at year-end."
Market competitiveness remained elevated in October, but was less heated than a few months ago. Although the statewide median of sales-price-to-list-price ratio remained above 100% in October, it was the lowest level in eight months. Nearly two thirds of homes (60.2%) sold above asking price in the latest monthly report, but that’s still the lowest level since February 2021. The sales-to-list-price ratio is an indicator that reflects the negotiation power of home buyers and home sellers under current market conditions.
The median number of days it took for the average single-family home in California inched up to 11 days in October, up from 10 days in September and 10 days in October 2020. That uptick was the first in more than two years.
California’s unsold inventory index dipped on a month-to-month basis for the first time in four months, as active listing fell 18.3% from last year. October's unsold inventory index was 1.8 months in 2021 and 2 months in October 2020. The index indicates the amount of months it would take to sell all the available inventory on the market at the current rate of sales.
The 30-year fixed-mortgage interest rate averaged 3.07% in October, up from 2.83% in October 2020, according to Freddie Mac.
