California Home Prices Decline in 8 Counties

Why do we care about California Home prices in Texas? A large number of Austin area buyers, especially investors, are from California. Many of these buyers have either cashed out of homes in California and moved to Austin, or they have used equity in California real estate to finance investments in Austin.

This is not to say Austin relies on California buyers to keep our real estate market moving, but there is no doubt that California buyers/investors have affected our market and contributed to the upward swing in prices, especially over the past year. As California slows down, and people start feeling nervous about real estate, that should stem the flow of California Buyers and Investors at least somewhat.

Story is below

Eight counties in California experienced year-over-year home price declines in September, according to DataQuick Information Systems.

Six of the eight counties are in the San Francisco Bay area. Prices in Sonoma County fell the most, at 7.7 percent.

Other declines were seen in Contra Costa County, 5.5 percent; San Diego County, 4.4 percent; Ventura County, 3.3 percent; Solano County, 2.3 percent; Napa County, 1.9 percent; San Mateo County, 0.9 percent; and Alameda County, 0.7 percent.

Home sales were also down statewide on an annual basis in September, according to DataQuick.

In all, 42,450 homes were sold — a 28.8 percent drop from the same month the previous year and a 14.8 percent decline from August.

The sales were the slowest for the month of September since 2001, when 41,880 homes were sold, according to DataQuick.

Source: Associated Press

Posted by Steve
9 years ago
Steve

Steve is a Real Estate Blogger, Husband and Dad, UT Austin Grad, Runner, Real Estate Broker and owner of Crossland Team and Crossland Real Estate in Austin TX.

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Leon Fu - 9 years ago

Steve,

Even if California prices drop 5%, they are still way, way, way above the price of homes in Texas. I would think a slow down in California may accelerate people moving to Texas. If I owned a home in CA that was declining in value, I would consider selling after a big run up to protect my gains. But I may need to buy something else if this (1041 exchange?) is not my primary residence to avoid paying taxes on the gains. So why not buy in Texas cause it’s moving up and bucking the national trend? I think the slow down in California is driving our markets as people cash out of CA and buy into TX….

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Steve - 9 years ago

Hi Leon,

1031 Exchange is used to defer capital gains taxes on investment property. A primary residence can be sold for zero capital gains taxes up to a $250K gain for singles and $500K for married couples provided that the home was occupied by the seller for 2 of the previous 5 years. The two years don’t have to be consecutive.

I don’t think a slowdown in CA will accelerate people moving to TX. They have to be able to sell first, and if the market softens, that will be tougher to do. The other shoe hasn’t dropped yet either, which is all of those adjustable mortgage loans that are going to put home owners in a fix over the next 5 years as they can neither afford their new payments nor do they have sufficient equity to sell.
Steve

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Leon Fu - 9 years ago

Steve,

I’m looking at various mortgage rates and they have been coming down for the past few weeks. I’m seeing 30 year fixed mortgages going for just over 6%. That is still historically ver low. This is surprising to me. I expected mortgage rates to be over 7% by this time, but the bond markets have been extremely strong. People keep saying the other shoe is going to drop, but I’m not so sure now. Perhaps everyone is too negative. Right now there is a bit of a stand off in CA. Buyers will not pay up and sellers still haven’t lowered their prices much. The sellers may not have to sell. As long as they hold their jobs (and the job markets nationally are very strong at this point; unemployment is low), they can stay in their house.

If the sellers don’t sell and don’t need to sell (if they hold their jobs and interest rates remain where they are or even go lower), the buyers eventually have to capitulate and pay up. We are a growth country. The US Census reported that the US population has crossed 300 million. The USA adds millions of new people ever year. The Austin metro area is adding about 40,000 new people every year. All of these people need to live somewhere….

I think many people are too negative even in places like CA. There may be a decline, but not nearly the magnitude of what many are expecting…

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