October Sales in California hit a 7-year low in October as affordability concerns and more cautious buyers weighed on the market, according to statistics compiled by ATTOM Data Solutions, Realtor.com, CNBC and the California Association of Real Estate.

The decline in deals below $500,000 was down -13.1% y/y, nearly twice as steep as the overall market. Persistent affordability concerns continued to undermine this market segment as did rising mortgage interest rates and continued inventory shortages for lower cost homes usually targeted by first-time buyers.

On the other hand, deals over $500,000 increased 0.4% and deals over $1M rose 5% when compared to October 2017 sales rates.

The median price for a single-family home in California in October 2018 was $487,000, up 0.4% from September 2018 and up 5.9% from October 2018. Despite these median price percentage increases (all adjusted for inflation) the median price of a home in California has not returned to the pre-housing-bust peak in March 2007. In fact this current $487,000 median price is -16.1% below the peak median price 11.5 years ago.

The real kicker among all of these statistics is that the monthly principal-and-interest mortgage payment on the state’s median priced home was up almost three times in October 2018…+18.2%… over October 2017 due to the nearly 1% point increase in interest rates.

As a result of these interest rate increases, the number of Adjustable Rate Mortgages rose +12.7% in October, higher than in any month in 4 years and +10.9% more than in October 2017.

Absentee buyers (investors and second home buyers) rose +22% in October 2018 compared with September 2018. The number of absentee buyers was up +21.5% from October 2017.

Breaking out the sales patterns in the northern and southern parts of the states,

  • the 6-county Southern California region sold a total of 19,193 new and existing homes in October 2018
    • the median price was $525,000, up +6.1% y/y.
    • the number of homes sold was down -7.5% y/y.
  • the 9-county San Francisco Bay Area sold 7,158 new and existing homes in October 2018
    • the median price was $845,500, up +9.3% y/y.
    • the number of homes sold was down -6.5% y/y.

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