California Market Cooling Slightly

Key Highlights

• Statewide home sales dipped -2.7% y/y in May
• Days on market held steady instead of dropping for first time in 2021

California Buyers Backing Off A Bit

As the median price for a single-family home in California hit another record high in May, some buyers chose to back off.  The median number of days on the market held steady at seven in May, the first time since the DOM number did not decrease in 2021.  And, statewide home sales dropped -2.7% in May.

After April’s median price jumped +7% to $814,010, May’s median price increased slightly by just a half a percentage point.

According to John Graff, chief executive of Ashby & Graff Real Estate in Los Angeles, “Buyers are getting fed up at this point with submitting as many as eight to twelve offers and getting rejected.  They’re throwing up their hands at this point.”

Ultra-Luxury Sales Driver of Record-Breaking Median Home Price

It was only seven months ago when the median price of a single-family home in California came in at $700,000.  A year prior in May 2020, the median home price was $588,070.

In May, as we wrote in two paragraphs above, the median price of a single-family California home came in slightly more than $815,000.

According to Kelli Miller, a San Diego broker, today’s single-family median home price is making prospective buyers “exhausted.”   Kelli said, “(My clients) would still love to buy a house but they’re not interested in the bidding wars.  I’m still seeing multiple offers, but it’s not the frenzy that it was before.”

A May 2021 report from the California Association of Realtors (CAR) indicated that ultra-lux property sales are playing a key role in driving California’s record-breaking median home price.  The share of $1M home sales in the Golden State has exploded more than +200% from May 2020 due to “robust demand of higher-priced properties.”

According to this CAR report, “More million dollar properties were sold in the past couple of months than homes priced below $500,000.”

Where Market Cooling Most Noticeable in California

The median home price in the Los Angeles Metro area held steady at $725,000 from April to May.  California’s Central Coast saw the median sales price drop -2.8% in May.  And California’s far north saw its median sales price decrease just slightly from $367,250 to $365,000.

California’s condominium and townhouse market sector, however, saw an increase of +3.9% in median sales price to $592,200 during May.

Buyers & Selling Taking Time to Breathe or Getting Out of the Market?

Jonathan Miller, president of the appraisal firm Miller Samuel and author of the monthly Elliman Report, does not buy into any doomsday scenarios about a pending bubble burst.  Instead, Miller said, “The lack of inventory is pervasive and we’re seeing buyer fatigue.  The market is still quite intense but not at the same level it was earlier this year.  This doesn’t mean that the next step is a downward trend; it only suggests that the incline won’t be as steep as it was.”

Graff, the Los Angeles broker, agrees with Miller.  “The market is still very hot. This might be a slight cooling as buyers and sellers all take a collective pause to breathe, but there’s no sign of this abating any time soon.”

Thanks to The New York Times.

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