Wildfires Threaten SoCal Housing Markets Already Struggling with Unaffordability and Low Inventory, According to Redfin

05:26 12/14/2017

Home price growth was strong in November, up 7.8 percent from last year, according to Redfin RDFN , the next-generation real estate brokerage.

The median sale price was $292,000 across the markets Redfin serves. Sales were down 1.3 percent. The number of homes for sale declined 12.8 percent compared to a year ago, marking 26 months in a row of inventory declines.

“Overall, 2017 has been an uneven year for home sales. The year started out strong, but a combination of low inventory and weather events overtook sales growth; sales have been flat to declining in six out of the past 11 months,” said Redfin chief economist Nela Richardson.

“The good news is markets have been quick to recover from severe weather events, even as challenges remain. For example, Houston home sales were up 4.3 percent in November from a year ago, and Tampa sales were up 6.1 percent. We are hopeful that Southern California markets show the same level of resilience in the aftermath of wildfires there,” Richardson continued.

The number of homes newly listed for sale in November increased a modest 1.1 percent. Any increase in new listings is welcome news for buyers, however, the number of homes put on the market in November wasn’t enough to put a dent in the long-standing inventory shortage. There were 3.1 months of supply in November, far below the six months of supply that represent a market balanced between buyers and sellers. Nationally, the typical home spent 46 days on the market, four days fewer than last November.

In parts of Los Angeles, Ventura and Santa Barbara counties, hundreds of homes have been destroyed by wildfires and hundreds more are under threat from fires that remain uncontained. While it is too early to know how many families and homes will be impacted, we do know these counties are already facing a shortage of homes for sale. Families who are displaced by the wildfires will find it challenging to find another home for sale nearby.

In Ventura County in November, inventory was down 17.6 percent and prices grew 9.8 percent year over year to a median of $600,000. In Santa Barbara County, inventory was down 23.3 percent and prices grew 6.8 percent year over year to a median of $575,000. The fires will cause further stress in an already tight housing market.

“The fires have had a big impact on the people and communities in and around Ventura, Ojai and Santa Barbara,” said Redfin agent John Venti. “Our already low inventory levels are likely to take a beating in the coming months not only from the loss of homes but also the disruption of life and business in the area. A few prospective home sellers have texted me as they were being evacuated to cancel our listing consultation appointments. But these fires, devastating as they are, are temporary. I’m optimistic that people will resume their holiday festivities and business as usual as soon as the fires are extinguished and the air clears.”

The impact of the October wildfires in Northern California was seen in November market data. In Santa Rosa, one of the hardest hit cities, inventory fell 46.6 percent in November from a year prior, a 27.8 percent drop from October. Across Sonoma County, inventory declined 31.2 percent year over year and prices rose 15.2 percent to a median of $633,000. The typical home in Sonoma County sold for 101.6 percent of the asking price, the highest sale-to-list price ratio since 2013. This spike in competition is unusual for the November market and likely related to the fires.

Home sales were up 8 percent year over year in Santa Rosa and 6.4 percent in Sonoma County in November. December sales in the affected areas may decline as a result of the fire activity.

This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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