Recent data show the rapid pace of home price appreciation slowing. According to the CoreLogic Home Price Index report, values were still improving in July but at a more moderate pace of 7.4 percent when compared to July 2013. Values were up 1.2 percent in July when compared to June. Home values nationwide are now just 11.9 percent below their peak in 2006.
Home values are projected to continue to cool in the coming months. Short-term projections forecast an annual increase of 5.2 percent in July 2015 when compared to July 2014.
Bringing it closer to home, California did a little better, posting a statewide increase in July 2014 of 10.5 percent when compared to July 2013. However, the pace of increase seems to be slowing, as the June to July number was just 0.7 percent. At an annualized pace it could still be a couple more years before California home values return to their peak levels reached in May 2006. Potentially, it could be as far out as 2017 — more than 10 years since the peak — before values fully recover in all areas of the state.
So are we finally returning to something like a normal housing market? It probably depends on your definition of “normal.” Values have been improving at a wicked pace for the last couple of years as available homes for sale remained at far lower levels than normal. Inventories of new and resale homes are rising for the first time in years. Indeed, some interesting statistics were released a couple of weeks ago that showed the pace of home sales slowing as builders increased the rate of homes being built.
Yet as sales slow and inventories increase, builder confidence remains high. Why? The reality is that there is still a shortage of home stock. Family units continue to increase as people graduate and enter the workplace and immigrants arrive seeking the American Dream, even if the economy was the worst it’s been since the Depression.
Taking a look around the local markets, I looked at the properties currently listed on MLS in Benicia and Vallejo. Keep in mind that I have heard from several Realtors that just because it is on MLS doesn’t always mean that it is truly an available property.
That said, according to the MLS there are currently just 48 active listings in Benicia and 213 in Vallejo.
This is definitely an improvement over a year ago and a welcome sign for hopeful buyers. However, it is nowhere close to a normal amount of inventory. In my own experience, buyers are finding much more success today than this time last year; however, multiple offers are still a common occurrence. The difference is now there may be two or three offers on a property instead of five to 10.
Guy Benjamin (CAL BRE License #01014834, NMLS 887909) writes a weekly column for The Herald, offering general information on real estate matters. As it is impossible to address all possibilities and variations, he will try to answer individual questions by readers who contact him at 707-246-0949 or guyb@fairwaymc.com.
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