Current home sales
In August 2024, 25,009 escrows closed in California for new and resale home transactions. August home sales volume was down 3% from the prior month. August 2024 sales were down 1% from the same month a year earlier.
Further, August’s year-to-date (YTD) sales volume for 2024 is 8% above a year ago. However, compared to 2019 — the last normal year before the economic tsunami of the 2020 pandemic — sales volume YTD is 31% lower. A real estate recession by most standards.
Recent home sales trends
Annual home sales in 2023 experienced a 22% decrease from 2022. More critically, sales volume in 2023 was 30% below 2019 — the last year to experience a typical sales cycle.
The homebuyers available in 2023 were cannibalized by the preceding pandemic-driven buying spree. Further, today’s buyers know their math for income leveraging and are less inclined to buy until sellers adjust prices to offset the reduced borrowing induced by greatly increased mortgage rates.
Sales volume trend today strikes at pricing
Watch for home sales volume to trail off through the end of 2024 in spite of a slip in high mortgage rates. Without the support of a steady rush of homebuyers, home prices do begin to decline, as 2024 is observing in high tier property.
As home prices decline across all pricing tiers, recently mortgaged homebuyers with little downpayment will see the equity in their home slide underwater. Expect a return of real estate speculators by 2026-2027 producing a “dead cat” bounce in both sales volume and pricing.
Within 12 months following the speculator-driven bounce, home prices will bottom. It is then that a sustainable sales volume and pricing recovery will take over with the return of end user homebuyers, likely around 2027-2028.
Updated November 2024.
Chart 1
Chart update 09/19/24
Aug 2024 | Aug 2023 | YoY change | |
| California home sales volume | 25,009 | 25,251 | -1% |
Home sales fluctuate from month to month for a variety of reasons. The most significant reason is the volatility of homebuyer demand. Several factors constantly move California’s homebuying market, including:
- seasonal motivational differences, an annual cycle [see Chart 2];
- mortgage interest rate movement;
- home pricing sought by sellers;
- investor and speculator opportunity perceptions;
- negative equity property financials;
- turnover rates for tenants and owners; and
- homebuyer saving rates.
Seasonal differences in annual sales volume
It’s normal for home sales volume to rise in the first half of the year and fall after peaking around June.
Chart 2
Chart 2 shows average home sales volume experienced from 2011-2018, a recovery period. As depicted, the most homes sold monthly during a year close escrow in June. Another upturn takes place in December, as homebuyers seek to wrap up their financial activities before the end of the year.
Real estate professionals need not fuss when they hear of falling sales volume in the latter half of the year. It is a normal seasonal progression taking place. What to watch for is year-over sales, to compare one month this year, or other period such as year-to-date, with the same month or period last year.
The recurring recovery for home sales volume
Annual real estate sales numbers since the Great Recession of 2008 were characterized as a bumpy plateau in home sales volume. This period ended in 2020 with the Covid pandemic.
As a rule, current market activity, whether up or down, is reflected first in sales volume, followed in nine to 12 months by price adjustments. Both sales volume and prices fluctuate from month to month. However, they trend in opposing directions like a seesaw.
Chart 3
Chart update 09/19/24
| 2024 | 2023 | Annual change | |
| Annual home sales volume | 267,865 | 260,064 | +3% |
To set the stage for a forward look, a review of sales volume in the recent past is helpful:
- Mid-2005 saw sales volume peak for all types of real estate in California, with nearly 754,000 homes sold that year;
- sales bottomed in 2008 and were artificially inflated in 2009 due to subsidy-induced purchases and speculators prematurely jumping on that momentum, but remained 40% below 2005;
- 2011 increased slightly in sales volume while decreasing in sales prices, a normal price adjustment condition;
- 2013 home sales volume stagnated while home prices increased rapidly some 30+%, not a good set of signs for the immediate future; and
- 2018 saw sales volume decrease rapidly in the fourth quarter, ending the year 4% below 2017;
- 2019 home sales volume decreased slightly from the prior year; and
- 2022 home sales volume peaked early in March and lost all ground gained in the pandemic year of 2021, ending the year 24% below 2021, but only 12% below 2019, the last “normal” year for home sales before the pandemic upended market dynamics.
- 2023 home sales lost a further 22% over the prior year, further wiping out the ground gained in 2021.
- 2024 home sales have stabilized from the prior year, with a slight downward trend. This will likely remain the norm until mid-2025.
Chart 4
Chart update 09/19/24
| Aug 2024 | Aug 2023 | Aug 2022 | |
| Home sales volume year-to-date | 183,874 | 179,285 | 245,265 |
Year-to-date (YTD) home sales volume in 2024 rose slightly compared to a year prior. As of August 2024, YTD home sales volume is 3% above a year earlier. Compared to 2019 (the last “normal” year for housing before the Pandemic Economy took over), home sales volume YTD is 24% lower as of August 2024.
Home sales volume continue to fall back in 2024, caused by:
- lowering homeowner turnover due to high mortgage rates;
- less demand from buyers
- home inventory across the state; and
- the 2024 recession, which is as yet undeclared, but is well underway throughout our housing market.
Home prices leveled off in late 2023 and will soon fall, dragged down by significant cuts to buyer purchasing power.
Home sales in the coming years
The forward trend in California home sales is mixed for both buyers and seller. Homebuyer income is going further and doing more than anytime during the past 15 years due to increased borrowing capacity brought on by low interest rates, at historic lows in May 2020.
firsttuesday forecasts home sales volume will steadily increase in 2024-2025, the result of new construction and lower interest rates.
Relocating Baby Boomers going into retirement in the coming years will be the primary propelling force in both selling homes and buying replacements. Their Generation Y (Gen Y) children will add to the sales volume at the same time as they find jobs at better pay levels and become first-time homebuyers. Gen Y influence will peak in sales volume at the end of this decade as they complete their shift from renting to owning.
Once California’s job market rebounds from the current recession, their confidence about the future will improve. They will once again be willing to invest in the economy since the expectations for tomorrow are projections based on yesterday’s most recent experience. Only then will occupying homebuyers – end users – return in sufficient numbers for sales volume to swell significantly.
Trends to be concerned about
Many long-term market conditions restrain the rise of home sales volume:
- the weakest homebuyer demographics in decades;
- failed savings for a down payment as high rents squeeze potential first-time homebuyers out of saving, and personal income since 2016 has risen at a pace slightly above the rate of consumer inflation during the period;
- buyer borrowing power no longer enlarging the funds they can borrow as interest rates inevitably rise, reducing funding for purchase-assist financing and dampening property prices;
- the public’s increasingly anti-business and pessimistic attitude about American economics, wealth inequality and national politics no matter the outcomes; and
- tightened loan standards as lenders are forced to apply forgotten fundamentals of sound mortgage lending practices (20% down payment on non-FHA/private mortgage insured loans, lower income ratios, risk-free credit scores and full documentation of income, funds and collateral value).
The competitive broker
What’s a broker to do until home sales volume takes off?
SFR brokers and agents might consider adding SFR-related services to supplement their income. Those who do add related services will restructure their practice as “all-service brokers.” Transaction-related services will be integrated into their office operations to maintain solvency and grow.
Related article:
https://journal.firsttuesday.us/how-to-survive-the-next-recession/68413/
These services include:
- escrowing their in-house transactions under the broker’s license;
- entering into or expanding property management services;
- negotiating equity purchases for investors from underwater owners on the chance of a short sale discount or who have a positive equity;
- specializing in sales and leasing of a particular type of commercial property, other branch office locations and alternative marketing approaches (aside from social media);
- providing mortgage loan broker services for business-investor loans made by private lenders and secured by the borrower’s residence (no mortgage loan origination (MLO) endorsement required);
- arranging carryback financing and the takeover/assumption of existing mortgages, and buying and selling those carryback trust deed notes;
- negotiating options to buy, or lease with option to buy when inventories expand as the shadow inventory of speculators returns to be sold;
- exchanging properties with equity to help owners relocate their wealth held in real estate tax free; or
- using barter credits in lieu of greenbacks, etc.
Prudent brokers will insist their prospective buyers commit to exclusive representations by the broker and agent to locate a home (or other property). By signing an exclusive right-to-buy listing agreement, buyers commit to employ brokers and agents just as sellers commit to employ brokers and agents, the obverse side of the same employment coin. This will ensure time spent with a buyer produces a closing and a fee.
Thank you ft Journal for the California home sales volume statistics.
Realtors want you to think it’s all about supply and demand but it’s not. Over 75,000 homes in the bay area are already in pre forclosure stage. (Of course realtors don’t tell you this, as well as banks….. profit earnings) interest rates are also going up, healthcare costs going up as well as living in general. Sadly, people’s income is staying stagnant while everything else is in an upward trend. Also you need to realize that FHA loans cap out at $631k in California. Because the Feds don’t recognize California’s housing prices to be accurate at all. So they won’t lend more than the 631k threshold. We’re over 30-40% above the national average (way off balance) just like the made up valuations (pulled from thin air) of tech companies who sell nothing tangible…. the housing market is also smoke and mirrors. (Just got my MBA from Anderson @ UCLA and have been studying the market here for 2 years now)
I know you’re right. Why are the prices really so high?
Greedy Realtor-Builder-Banker Industrial Mobsters colluding and enslaving the nation.
REALTORS are the only culprits that property prices are going up, because we try to give the seller the highest gain ever. Why not stop and standardize prices?
Home buyers keep earning almost the same as 10 years ago.
So it’s happening with HOA’s collections now. How much will they pay in 20 more years?
The value of the houses are becoming unreachable for the community.
So expensive that there will be a terrible number of homes for sale without a chance of being sold.
Is there another big drop in the Real Estates market?
Hey Wokka i am trying to buy a house and i am already pre- approved but would it be smart to wait and see where the housing market goes?? Or you think is a good time to buy right now??
If you’re pre-approved, and you have a great rate locked in, I wouldn’t throw it away by waiting to see what happens with the market. Rates are going to rise, and when they do, you could end up qualifying for less than you are approved for now, if the rates go high enough.
You need to make a decision: If you think the housing market will keep going up for a little longer yet, then now would be a good time to buy, since it’ll be more expensive later. If you think a correction or even a crash is coming relatively soon, then waiting may be a good idea, but you will most likely get a much higher rate than you are approved for now, but you’ll be able to buy the same home, or better, with lower property values in play.
There’s no guarantee about which way the market will go in the near future.
If you want someone’s opinion, buy the house now if you can afford it.
Now is the best time to buy!
-NAR
Thanks so much for your input, I have been a lender for over 30 years and have been trying to time the market right to make smart investments. You are right Ca is over prized compared to national average but I believe we also have the big tech, movie, foreign money pouring in to say the least. Don’t forget out weather LOL. Anyways, what I have noticed being a lender is that these FHA loans that allows non occupying borrowers to help actual occupants qualify will be the first to have some type of financial hardship if they cant refi out of those high PMI payments. We have been getting a few calls for clients that are wanting to refinance but can’t because the market appreciation is slowing down. I am curious where you got the info about 75,000 homes in Pre-Foreclosure up in Northern Ca.? Good luck with your MBA, 1stInnovativefinance.com
Without taking into account that HOA have been increasing year by year.
Is there a California government office that will review HOA high fees? … Currently it is so expensive to buy a condomminium that payments are as high as buying a home.
Where will the poor people who live the heaviest and least paid jobs live?
Think about the next 20 years. Who can live in California and pay a mortgage without eating?
Great analysis. Right on. Most Bay area homes are really old and in case of any type of natural disasters, the cost of rebuilding is exorbitant.
Housing market in the Bay area is good for flippers, tech-rich investors and those who can sell it to other fools at the peak value.
Thank you for telling the truth. Really! I see whats going on myself. Don’t know if i should buy now.
Hey Wokka72,
I completely agree with your comment. I’m 34 yrs old and have been studying the trends of housing and how the economics of the Bay Area are. I feel like their is a bubble about to explode.( I call it the last hooraahh for the baby boomers to screw their kids).
Really? It’s called the free market for a reason. If people are willing to pay such high prices, then that’s the valuation. I have a Masters degree too, but way more market/business experience so I’m sorry but I don’t agree with you.
I am looking into purchasing my first home. My husband and I make about $130k a year combined and we are tired of paying over $2k a month on rent. We live in the Bay Area. We are a family of 4 plus my mother would move in with us and would financially contribute. Is it a good time to buy? Because people keep convincing me otherwise.
Thanks
Alex, If you are confident you can stay in the home for at least 10 years, it will be a good decision for you… even if we are at a peak and we have another decline. Rents always go up. Houses rented for $600 a month 30 years ago are renting for $3,000 a month today. The $2k rent you are paying today will be $6K 30 years from now… possibly higher. If you want to retire some day you just have to own your own home.
Or invest that money in some low fee stock indexes. The rate of return has been higher historically (even adjusting for inflation).
It’s a good idea to buy in areas that offer larger homes for lower prices. The Bay Area has higher end prices, and you get smaller and older built properties for your hard earned income. Price per s.f. is extremely high in those cases. Get more for your dollar, which is usually not so close to the center of Metropolitan Cities.
Yes – you are losing money every year due to constant increase in asking prices. You will be chasing the market, and have to keep saving to meet the down payment percentage your lender requires. If you are a first time buyer, some lenders have a 3% down conventional loan. Avoid FHA if you can, because Sellers place your file at the bottom of the heap. It’s a Seller’s market, which means we are receiving multiple offers and high down payment offers. Broker: vickismithbkr@msn.com
* CAll Me, I can help. :)
Yep. prices have been going up without any real support, but I think the election is slowing sales at this time. Many homes have been on the market in my area for the last 3 months, when most sold quickly in the first half of the year – just wait until December depending upon who wins!!
Question to the Author or any one else who wants to answer . First Thanks for the well written, and researched article. I am thinking about upgrading the size of my home I bought at rock bottom. I do not want to pay capital gains tax on the next house and am already watching my next moves housing market which i predict in 3years. Do are you confident this market will hold till 2019 ? I believe 3 years is the capital gain #?
I apologize for not editing this correctly
As long as you stay in the house owner/occupied for 2 out of 5 years (does not need to be back to back) you will not pay any capital gains.
Thanks for the update for 2016, these figures are pretty much what I tough they will be
Very well written and received. Much appreciated… finally, meat and potatoes I can digest. Thank you!
Century 21 is taking the approach of herding prospects into a large room and closing the sale before they leave. The postcards they are mass mailing talk about renting / buying and give the impression they are being aggressive about getting loans approved at low interst rates.
The prices are at the top again and no one can afford to buy or rent. We are clearly at the top and the bubble is going to have to burst AGAIN. It’s a cycle – we were here with houses 5-6 yrs ago, everyone was in foreclosure and now those houses are selling for 40-60% of their value 5 yrs ago. It’s insane and can’t be sustained. People making 6 figure+ incomes can’t afford to buy or rent. Something has to give – oh and the stock market bubble has burst so it’s going down. Don’t buy now – wait – the rental market will have to give as well because no one can afford the outrageous rents
I totally agree with you, first time home buyers will never be able to afford to buy with this market.
Not true. People making 6 figures can afford to buy, they just have to scale down their living. Peoples first home should be a modest home and grow from there. In the 1950s and 1970s people were happy and thinking they were living in luxury in a 1,000 square foot house. I make just under 100k and I am purchasing my sixth single family rental homes in one of the most expensive zip codes in Northern California as rentals in the past 2 years. It’s pretty easy to save and sweat some equity out with the rents. I drive an older car and buy my clothes on eBay, but heck, I have an excellent real estate portfolio and make high rents, because my places are clean and modern. And I spend a lot time working with contractors, accounting and working with my tenants. I am very hands on.
My husband makes over $100,000 a year and we are scraping by , maybe because you have rentals but sorry you have to make more then $100,000 to buy a home in CA. We live in San Diego and it’s outrageous. $400,000 gets you a ran down home in bad areas and under 1,000 square foot.
im 27yr old. and i make only $2600 a month. and i just bought my house at 2016 July for $225000 1200sqft house build 1970.house in very good condition . put down $20000. and im living in sacramento of CA. i just want to pass a message out…its not that difficult to own a house. u just need to watch your monthly spend, control it tight for 2 years. you will be good.
Nicole, I make half of what your husband makes, and I’m sitting in my 4bedroom/2 bath/1304 sq ft house that I purchased in 2009 for $179k. It’s far from a dump, and it’s clearly over 1,000 sq ft.I live in Suisun, in the North Bay, where people live and commute to SF, raising house prices here. Let go of the “woe is me, we make $100k and can’t buy a house because you “have to make more than 100k”. No you do not. You might need to lower your standards or move somewhere else in Ca, because houses in my city are selling for $370, or newer homes in the $400&500k range. I refuse to pay $365k for a home that sold for half that in 2009-2012, but they are out there for sale, and at $1700-1800 a month, including taxes,insurance, p&i, that’s LESS than rent out here.
Kelly, I apologize, but you have no idea what you are talking about. You cannot compare your geographic area to that of Nicole. I also live in San Diego, and this is in fact the case here. My 900 sq. ft., 1bedroom/1 bathroom apartment is $2,350/month. When I first started renting here 3 years ago, it was $1,630.
I recently got married, and have been searching for a home. The prices are absolutely outrageous here. If you want to live in any decent area, you need to spend $700,000+ for anything remotely nice. My business partner lives in a so-so area. His house is 2 bedroom/2 bathroom, and is around 1,500 sq. ft. He bought it 5 years ago for $400,000. It is now valued at $750,000.
Kelly, I live in Suisun City. It’s on it’s way up, back in 2009 I was just starting college and jobs were scarce. It’s going to get ridiculous for us who are just getting our first decent jobs to buy anything. Now the same homes folks purchased in 2009 are selling 400k and up.
I certainly cannot move to Sacramento, it would make my daily commute 4 to 6 hours long. We aren’t going to get anywhere either if everyone’s commuting at this rate my commute just gets worse every year as people move further inland. Let’s not forget employers are only giving a $0.50 raise or so each year if that, and that’s to folks with college degrees.
In Solano County, Zillow say we should expect housing costs to increase more than the rest of the bay area, I wonder why.
That’s how we do it too!
It is indeed insane. I saw a tiny condo that sold in 2012 for less than 100K in 2016 priced at 279,000. Yes someone bought it. The realtor said the prices higher are based upon high rents. No one can afford to buy or rent these days. A 2k month apt they are asking for 60k income. It is crazy. Something has to give. The powers that be are realizing that not everyone can even rent an apartment for they are asking you earn too much money, even if you are to rent for 3 months. They are trying to say we are not in a bubble, this is what is scary. Maybe it is simple demand, based upon the out of control immigration to this country….?
Immigration is a topic rarely discussed! The only way the state is increasing in population is due to immigration which fuels demand! Awesome points!
Awesome points! Immigration has a large factor in population and prices!
You’re right Michelle,
At this step we return again to 2002-2006 and we will make money again for 5 years and then we will starve the next 5.
REALTORS we must stop selling every day more expensive, because buyers are not making more money.
You’re right Michelle,
At this step we return again to 2002-2006 and we will make money again for 5 years and then we will starve the next 5.
REALTORS we must stop selling every day more expensive, because buyers are not making more money.
I agree with this statement. I’ve watched the market in California my whole life, and it’s definitely due to drop. It’s way over priced, and I really don’t see it going higher. It’s been rising and dropping every 10 years, and we’re right there again from 2008. I’m waiting to purchase, and feel like it would be very risky to purchase now.
Patti-I read we’re not actually at 2008 prices yet. I believe we’re in a bubble,and I’m TIRED of hearing “No Bubble, Simply low supply, high demand”. I purchased my home in 2009 for $179k, after it was foreclosed on someone who paid $399k in 2008. It was a dump in 2008, flipped in 2009, and I paid half of the 2008 price. Right now my house is “worth” $370, so we’re about $30k shy of 2008. Please do NOT purchase now. I’m not a realtor or expert of any kind. Just someone who in 2005,2006 said”I’ll never be able to buy a house here”, the watched the bottom drop out and was able to purchase a very affordable home. New roof, new heat&ac, new fence around the back yard, new sod and shrubs, new stoveµwave, new paint, carpet and dual pane windows. I literally can’t afford to rent. My mortgage is $1,000 a month. It was $863, but I rolled my Solar Panel loan into the mortgage, so when I decided to sell, there wouldn’t be a lien on the house. If I purchased today, I’d pay 50%more than I did in 2009, and I’d get 300 less sq ft, and 2 less bedrooms. Also, nothing new like windows, roof, etc, and no Solar Panels. I like to look at houses for sale on Zillow, because you can scroll down to the Pricing/Tax information, and it will show the previous sale dates and prices for the house. It truly makes you think”Do I want to pay $50% MORE for this house, that hasn’t been updated since it sold 5-7 years ago for half of what they’re asking? If I sold today and took my $145k in equity, I’d have to put most of it down on a “new” house, my payment would increase $500-$600 a month, my property taxes would double, and I’d be in a smaller,less nice house. I remember 2008 like it was yesterday. My credit card limits being cut to the balance because”I live in a high foreclosure area”. Not because I was in foreclosure lol. I was a renter. I believe “What goes up, must come down”. I don’t think rent prices will come down though, only homes. When the last bubble burst, rents increased because everyone who lost a home needed a place to stay. The apt I rented in 2009 rented for $825. Today it rents for $1695. NO IMPROVEMENTS MADE TO IT.They raised the rent by $100 a month yearly, and this year it seems it was raised twice. I don’t even want to own any longer, because of my neighbors and maintenance, but I can’t afford to rent and pay double my mortgage for a 2 bed apt. Good Luck :-)
What about getting a proposition passed banning foreign investors from purchasing residential real estate in California???? Austrailia and Norway are already doing so. Given the limited amount of housing the Bay Area has, I think this would be an excellent solution. Why are we selling the American dream of owning a home to foreign investors!? Would anyone vote for this ban???
I agree, but I just don’t know how much they impact this frenzy…I think it’s more in the tech over valuation. Once the stock cools down, it should bounce back.
Absolutely! It would take a LONG time to pass this type of legislation but if people in California push for it, it becomes possible! It’s got my vote anyway.
I agree but also disagree. Americans have purchased homes as well outside the US causing this effect in other countries. To me the root of the problem is we do not educate thus employ our own working force; depending on outside workers. One solution might be to add a foreign property tax to this ownership and spend the extra tax on college scholarships.
There should be a ban. When the last bubble burst, you heard about foreign investors, esp Chinese buying up just to buy, and the properties would then sit. If feels like we are being taken advantage of… I will just have to vote for the candidate who gets it.
Great friggen idea!!!!! Finally someone who gets it!
Typical California attitude. Believing that jobs are increasing. Did you even look at the jobs report they are all crappy jobs flooding the market and all the good jobs are leaving
Is it true you could buy a home if your credit is around 610. I have proof of rent for the last 3 years at 2600a month
Yes, with an FHA Loan
Tony
If you truly wish to purchase… there is a way… $2600 a month can buy you a decent home in a decent neighborhood with a realistic attitude.