A highly competitive market pushed California’s housing recovery into high gear in 2012, forcing homebuyers into bidding wars for available homes and rewarding sellers with the strongest prices seen in years.
A new report — the California Association of Realtors’ annual Housing Market Survey — helps explain the dynamics of today’s market.
The survey found that 57 percent of home sales received multiple offers in 2012, the highest in at least the past 12 years, with each home receiving an average of 4.2 offers, up from 3.5 in 2011. Lower-priced homes – typically short sales and bank-owned properties known as REOs – attracted more offers than equity sales. Seven of 10 short sales and REO sales received multiple offers, while only half of equity sales received more than one offer.
Such a competitive housing environment has led to more properties selling at or above the list price, with 41 percent of homes selling without a markdown from the asking price, the highest since 2005 and up from a long-running average of 32 percent.
Additionally, homes sold faster in 2012, with equity sales selling in 32 days compared with 67 days in 2011. REOs took 30 days to sell compared with 50 days in 2011, while short sales took 90 days compared with 141 days in 2011, reflecting the still-difficult process.
Many regions in the Bay Area saw even tighter markets.
“San Francisco saw a higher percentage of multiple bids than the statewide average,” said Patrick Barber, president of Pacific Union International’s San Francisco region. “A solid majority of homes here are selling at or above the asking price.”
In the East Bay, nearly 70 percent of home sales received multiple offers in the third quarter, and many homes went into contract within two weeks of coming on the market.
Across the state, the competitive market is being fueled by favorable home prices and record-low interest rates combined with pent-up demand and a severe shortage of available housing.
“Well-qualified buyers are recognizing the once-in-a-generation opportunity to purchase a home in California and are jumping into the market,” C.A.R. President LeFrancis Arnold said in a statement accompanying the survey. “However, the fierce market conditions have forced many buyers to compete with all-cash offers and investors, setting off multiple offers and bidding wars, making it even more difficult for first-time buyers to become homeowners.”
Other findings from the survey:
- The percentage of homebuyers making all-cash purchases has more than tripled in the past 11 years, from 9 percent in 2001 to 30 percent in 2012.
- Demand for investment properties and second homes remained strong in 2012, with investors accounting for 16 percent of sales and second-home buyers for 7 percent. The remaining 77 percent purchased homes as a primary residence.
- International buyers accounted for 5.8 percent of sales in 2012, relatively unchanged from 5.7 percent in 2011. Buyers from China, Canada, India, and Mexico made up the vast majority of international buyers at 39.1 percent, 13 percent, 8.7 percent, and 8.7 percent, respectively.
- Reflecting tighter lending standards, very few homebuyers have a second mortgage. The share of home sales with a second mortgage has fallen dramatically from a high of 43.4 percent in 2006 to 1.8 percent in 2012.
The C.A.R. report was based on a questionnaire sent to a random sample of 15,000 real estate agents throughout the state.
(Photo courtesy of J.G. in S.F., via Flickr. Chart courtesy of the California Association of Realtors.)