Brocker.Org: There’s a big divide in California’s housing market

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California’s housing market is moving in two different
directions. 

Luxury homes in the first quarter sold at the fastest pace ever
for the first three months of the year. But sales of houses
priced under $500,000 fell to a nine-year low, according to a
recent report from
CoreLogic

Wealthier buyers, shopping for homes worth $1 million and
greater, were attracted to the housing market as the stock market
rose to record highs, CoreLogic’s Andrew LePage said.

There’s a historical correlation between the stock market and
luxury home sales, LePage added. Some profits earned from the
market are reinvested into property, and in some cases, buyers
have greater confidence because their portfolio gains make them
feel wealthier.  

The 10,562 luxury homes that sold in the first quarter were
smaller on average and located on smaller lots relative to the
past decade, LePage said. This shortage in urban centers,
especially downtown, is helping to drive up prices, and
restricting the amount of new inventory that homebuilders can add
to the market.

California is home to some of the nation’s most expensive housing
markets, including San Francisco and San Jose.

The national S&P CoreLogic Case-Shiller national home price
index set a fourth-consecutive high in February, the most recent
month of data released. 

“We aren’t in a bubble, and won’t be entering one anytime soon,”
said Svenja Gudell, Zillow’s chief economist, in a report
Thursday showing that the real estate company’s
home value index
surpassed the pre-recession peak in
April. 

“There are big differences between the market then and the market
now: Then, loose credit, speculation and overbuilding were
ingredients in a recipe for disaster. Now, healthy home buyer
demand is being driven largely by a stable economy and
demographic tailwinds, which is exactly what we would expect in a
healthy market.”

But it’s a tight
market
for buyers hunting for starter homes. The shortage of
affordable housing is slowing the pace of existing-home sales. A
report from the National Association of Realtors on Wednesday
showed that existing homes in April were on the market for
the fewest days on record amid “stubbornly low supply
levels.”

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