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For release:
July 25, 2016

California pending home sales post third straight annual increase in June

LOS ANGELES (July 25) – Led by the San Francisco Bay Area, California pending home sales continued their upward momentum in June to post three straight months of annual increases, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

The California housing market remained very competitive, as C.A.R.’s June Market Pulse Survey** reflected a slight increase in sales with three or more offers over the previous year, particularly in homes priced $300,000-$399,000, which climbed from 8 percent in June 2015 to 18 percent this year.

Pending home sales data:

• Statewide pending home sales rose in June on an annual basis, with the Pending Home Sales Index (PHSI)* increasing 3.2 percent from 123.4 in June 2015 to 127.3 in June 2016, based on signed contracts. With pending sales on a rising trend in the past couple of months, June’s increase should portend for higher closed transactions in July and August.

• California pending home sales declined 7.0 percent on a monthly basis compared to May, primarily due to seasonal factors. When adjusting pending sales for typical seasonal patterns, pending sales were down 3.2 percent from May and up 3.0 percent from June 2015.

• After trailing behind Southern California and the Central Valley since the beginning of this year, the San Francisco Bay Area led the regions, with pending sales increasing on an annual basis across the state.

• For the Bay Area as a whole, pending sales were up 5.1 percent from June 2015 and down 16.3 percent from May. The June increase in Bay Area pending sales suggests a brighter outlook for the region, which had been trailing behind 2015 in closed sales, primarily due to low affordability and tight inventory. An improvement in housing supply during recent months – especially in Alameda, San Francisco, San Mateo, and Santa Clara counties – should alleviate low housing stock in the upcoming months.

• Pending home sales in Southern California as a whole rose 3.2 percent from June 2015 and 1.3 percent from May, thanks to year-over-year gains of 5.5 percent in Los Angeles County, 4.1 percent in San Bernardino County, and 1.3 percent in San Diego County. Orange County experienced a 6.0 percent decrease from the previous year.

• Pending sales in Central Valley posted a gain of 2.6 percent from the previous year and were down 9.3 percent on a month-to-month basis.

Year-to-Year Change in Pending Sales by County/Region

June REALTOR® Market Pulse Survey**:

In a separate study, California REALTORS® responding to C.A.R.’s June Market Pulse Survey reported slower growth in floor calls, listing appointments, and open house traffic, indicating slowing market activity. In a reflection of a slowing market, the proportion of homes selling above asking price declined in June.

• After reaching an all-time high of 38 percent in May, the share of homes selling above asking price in June dropped to 35 percent, but was up from 33 percent a year ago. Conversely, the share of properties selling below asking price rose to 37 percent from 34 percent in May. The remainder (28 percent) sold at asking price.

• For the homes that sold above asking price, the premium paid over asking price rose for the first time in three months to an average of 11 percent, up from 9.4 percent in May but was unchanged from a year ago.

• The 37 percent of homes that sold below asking price sold for an average of 11 percent below asking price in June, which was up from 10 percent in May but unchanged from a year ago.

• More than seven of 10 properties (72 percent) for sale received multiple offers in June, indicating the market remains competitive. Sixty-five percent of properties received multiple offers in June 2015.

• The average number of offers per property dipped slightly to 3.0 in June, compared with 3.1 in May and 2.9 in June 2015. Nearly one-half (47 percent) of properties received three or more offers in June. Homes priced between 300,000-$399,000 and $500,000-$999,000 saw the greatest increase in three or more offers compared to a year ago.

• More than one in five (22 percent) properties had price reductions in June, down from 23 percent in May. Twenty-one percent of properties had price reductions in June 2015.

• Low inventory, declining housing affordability, and high home prices were the top concerns for about two-thirds (68 percent) of REALTORS®.

• While still in positive territory, REALTORS®’ optimism of market conditions over the next year has been waning over the past few months, with the index decreasing to 52, down from 54 in May and 64 in June 2015.

Graphics (click links to open):

• Pending home sales by region.
• Homes selling at/above listing price.
• Nearly three-fourths of homes received multiple offers.
• Price range of homes receiving 3+ offers.

*Note: C.A.R.’s pending sales information is generated from a survey of more than 70 associations of REALTORS® and MLSs throughout the state. Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market. A sale is listed as pending after a seller has accepted a sales contract on a property. The majority of pending home sales usually becomes closed sales transactions one to two months later. The year 2008 was used as the benchmark for the Pending Homes Sales Index. An index of 100 is equal to the average level of contract activity during 2008.

**C.A.R.’s Market Pulse Survey is a monthly online survey of more than 300 California REALTORS® to measure data about their last closed transaction and sentiment about business activity in their market area for the previous month.

Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 185,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
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For Release:
July 19, 2016

CALIFORNIA ASSOCIATION OF REALTORS® Disappointed in HUD Decision to Insure FHA Mortgages with PACE Loans

LOS ANGELES (July 19, 2016) – The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) today issued the following statement in response to the U.S. Department of Housing and Urban Development’s new policy that the Federal Housing Administration (FHA) will begin insuring mortgages on certain properties with Property Assessed Clean Energy (PACE) loans.

"Although C.A.R. supports voluntary consumer-friendly energy improvement programs for homeowners, C.A.R. believes that HUD was ill advised to approve placing PACE loans in a senior position to FHA first mortgages," said C.A.R. President Pat "Ziggy" Zicarelli. "Doing so places FHA homebuyers and taxpayers at risk and does homeowners a disservice by approving a loan product without consumer protections and which is aggressively sold to homeowners who rely on FHA financing for safe and affordable mortgages."

PACE loans are unfairly expensive, and often are sold by high pressure door-to-door sales people. Although PACE loans are in a senior position, they carry interest rates higher than the first-mortgage or a home equity loan. C.A.R. feels that the FHA has failed to justify why it supports a program whose interest rates border on predatory and do not follow even basic lending guidelines for consumers.

"This loan product has no minimum disclosures, no underwriting of the borrower, no proof that the borrower has the ability to repay, no three-day right to rescind, no marketing limitations, no interest rate or fee caps, no kickback prohibitions; nothing," added Zicarelli. "If the housing market of the last decade has taught us anything, it’s that first-time homeowners, and low- and moderate-income homeowners are the most vulnerable and will be taken advantage of. Sadly, it is they who the FHA is inviting unregulated PACE lenders to target."

For the last six years, HUD has stayed silent while California’s housing market has operated under the guidelines of the Federal Housing Finance Agency (FHFA); the conservator of Fannie Mae and Freddie Mac. The FHFA prohibits PACE loans to be placed in a senior position to the mortgage. HUD’s announcement today of a contrary policy to accept PACE loans in a senior position to the first mortgage will only cause confusion and uncertainty for homeowners, home buyers, REALTORS®, lenders, escrow, title, and the housing market overall. The confusion is particularly unfortunate because the FHA only accounts for approximately 20 percent of mortgages.

Both the FHA and Fannie Mae currently offer mortgage financing that allows borrowers to finance energy efficiency improvements at lower rates than PACE loans.

Now, more than ever, the California legislature must pass C.A.R. sponsored AB 2693 (Dababneh) to ensure consumers are aware of the consequences of PACE loans and have the opportunity to rescind after a three-day cooling off period.

Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 175,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

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For release:
July 14, 2016

Racial disparities in roadblocks to achieving American Dream

Prospective home buyers want current presidential candidates to address housing affordability

LOS ANGELES (July 14) – Prospective home buyers face numerous challenges when it comes to achieving the American Dream, and homeownership obstacles vary among ethnic groups, according to a poll conducted by leading think tank the Futures Company in partnership with the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) Center for California Real Estate.

For all respondents, saving enough for a down payment is the biggest barrier to becoming a homeowner, cited by nearly one in three (29 percent) prospective home buyers, followed by housing supply constraints (27 percent), access to credit and financing (22 percent), and personal debt (19 percent).

These hurdles diverged across race and ethnicity. Thirty-one percent of non-Hispanic whites said constrained housing supply was the most likely deterrent to becoming a homeowner, while a third of Hispanics cited access to credit and financing as their primary challenge in buying a home.

African-Americans (33 percent) and Asians (32 percent) both cited a lack of down payment or savings as the main prohibitive factor in purchasing a home.

"With record high rents and only about a third of the state’s households able to afford to buy a median-priced home, the dream of owning a home in California is evaporating," said C.A.R. President Pat "Ziggy" Zicarelli. "It’s even more discouraging for prospective ethnic home buyers who must face greater obstacles to scrape together a down payment or obtain credit and financing."

Homeownership and sense of well-being

The poll also found that the vast majority (84 percent) of respondents agree that owning their own home gives them a greater sense of well-being and control over their environment. Across all incomes, races/ethnicities, and generations, respondents overwhelmingly agreed on the positive impact of homeownership on their personal satisfaction and health from having greater control over their environment.

Housing and retirement strategy

In connecting housing to opportunity, nearly three in four (72 percent) agree that owning a home is part of their retirement strategy, believing that homeownership is a tool for long-term financial security among those who plan to buy a home or currently own one.

Presidential candidates and housing policy

Lastly, nearly three-fourths (70 percent) of survey respondents who plan to buy a home agreed that they would like the current presidential candidates to address how to make housing more affordable in their campaigns.

And, across all incomes, generations, and races/ethnicities, consumers were strongly in agreement that housing affordability should be a top priority on the presidential campaign trail as candidates make their pitches for ballots in the lead-up to the November contest.

However, housing affordability and solutions to reduce the cost of living have received noticeably little attention this campaign season. Other than releasing plans to increase the five-decades-low homeownership rate, the presumptive nominees, Democrat Hillary Clinton and Republican Donald Trump, have not issued comprehensive housing policies, including action items to address the significant housing affordability crisis.

The Center for California Real Estate (CCRE) (centerforcaliforniarealestate.org) is an institute from the California Association of REALTORS® dedicated to advancing real estate knowledge. The goal of the center is to arm C.A.R.’s 185,000 members with ideas that help them become more knowledgeable, professional, and insightful in their work as practitioners and stakeholders in the future of real estate. To fulfill this goal, CCRE regularly enlists the foremost experts on topics of pertinent interest to the industry.

Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 185,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
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