Cash Sales 25.3 Percent of Total Sales, Highest Since March 2014
Cash Buyers Still Plentiful Despite High Prices
“California’s real estate market went into early hibernation starting in October 2015,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “On a year-over-year basis, sales have been remarkably flat. That’s good news because the California real estate market continues to shrug off broader national and global financial turmoil.The bad news is that resilience has translated into flat markets for the foreseeable future.”
“Lack of inventory and high prices continues to stifle activity”, said Schnapp. “Our October 2015 headline, ‘Flat is the New Black’, looks more and more likely for the rest of 2016 as economic growth slows and real wages remain stagnant.”
- Flip Sales. This past February, flip sales gained 7.6 percent for the month and were up 15.9 percent over the past 12 months. Flip sales accounted for 4.0% of total sales, the highest since March 2014. Despite the monthly increase, flip sales are typically lower in January and February in response to seasonal forces that impact the overall real estate market. Flip activity will likely increase during the month of March, coincident with the start of the spring selling season.
- Negative Equity. The number of homeowners in a negative equity position edged higher this past month due to the seasonal decline in prices. Currently the number of negative equity households is slightly greater than 560,000. Despite the small increase this past month, since February 2015 half a million California homeowners are no longer underwater and can now participate in the real estate market. In February 2015 one in nine California homeowners were underwater, today that number is one in seventeen.
- Institutional Investor (LLC and LP entities) Purchases increased 16.9 percent in February 2016 recovering half of the January decline but were down 1.0 percent from February 2015. The seasonal decline in prices likely spurred investor activity this past month. Despite the increase, purchases are down 55.3 percent from their peak in December 2012.
- Trustee Sale purchases by LLC and LPs fell 2.3 percent for the month but were up 37.7 percent from February 2015. It is important to keep in mind that trustee sale purchases by LLCs and LPs are low so small increases and decreases in activity translate into large percentage increases or decreases. Taking a longer look, trustee sales are down 88.2 percent from their October 2012 peak and have trended mostly sideways since May 2014.
- Institutional Investor sales by LLC and LPs were up 5.6 percent for the month but were down 9.7 percent from February 2015. Despite the increase this past month, investor sales have been on a steady downward trend since reaching a peak in December 2012, falling 73.9 percent.
- Foreclosure Notices and Sales. Foreclosure Notices of Default (NODs) gained 3.5 percent from January 2016 and are up 8.1 percent since the beginning of the year and at their highest levels since April 2015. NODs typically fall during the holiday season and pick up again after the first of the year. Despite the increase, NODs were down 5.8 percent from a year ago. Meanwhile,Notices of Trustee Sale (NTSs) fell 3.9 percent for the month and were down 9.7 percent from February 2015. Despite recent activity, both NODs and NTSs are near their lowest levels in our records dating back to January 2007. Foreclosure sales fell 8.4 percent for the month, and are down 11.3 percent in the past 12 months.