California Real Estate Trends For 2004

A survey released by the California Association of Realtors has recently been released documenting some interesting trends in real estate in the state for the year 2004.  The Los Angeles-based association is one of the largest state trade organizations in the United States, with more than 155,000 members dedicated to the advancement of professionalism in real estate.

From the results of the survey, a startling number of buyers and sellers in California, reaching almost 50-percent, used the Internet to research the residential market last year.  The internet was an essential tool with 47-percent of individuals using it to gather information on real estate.  This was an overall increase of 12-percent, while 56-percent of homebuyers specifically using the internet, up from 45-percent in 2003.  

The housing market was also largely influenced by baby boomers.  The survey revealed that this demographic was involved in three out of every four home sales, fueling the state's real estate market.  “Because of its size and current life-cycle, the boomer generation is likely to play a significant role in the housing market over the next several years,” says association President Jim Hamilton.  Hamilton added, “Trade-ups and the purchase of second homes will continue to put pressure on the housing market.”

Condominiums also played a significant role in the state’s real estate market.  The number of detached home sales dropped to 76-percent in 2004 from 90-percent the previous year, while attached home sales increased to 24 percent last year from 10 percent in 2003.

On the home selling front, the survey notes that 29-percent of home sellers sold their home because of investment or tax advantages.  24-percent of them sold their homes because their family status changed, and 40-percent sold their homes because low interest rates afforded the opportunity to trade up, and 15-percent sold their homes because they wanted to take their appreciation and cash out.  The typical home seller in California was 47 years old, married, and had an annual household income of $135,000.

 Other highlights from the survey includes:                                                           

• 2004 was a record year for home sales, a projected 3-percent over last year’s record-breaking sales figures of 601,800 existing detached homes.

• 2004 was a record year for home prices, where the median price of a single-family home crossed the $400,000 threshold in late 2003, and will finish the year with an annual median in excess of $450,000.  This accounts for a 22-percent increase compared to 2003 where the annual median price was $372,700.

• The median number of days it took to sell a single-family home in the state was projected at 29 days.  This was the third lowest in California’s with only the previous two years taking a shorter time – 27 days in 2003, and 26 days in 2002.

• The affordability gap between California compared to the rest of the nation reached an all-time annual high of 36-percent in 2004.  Nationally, affordability was at 56 percent in 2004, four points below its record high.  In fact, the National Home Builders Association has shown that 19 of the tope 25 least affordable real estate markets are located in California in the third quarter of 2004.

• New home buildings eclipsed the 200,000 mark in 2004 for the first time in more than a decade, with an expected total of 206,000 permits for the year.  The last time the state exceeded 200,000 permits was in 1989, when 238,000 permits were issued.  Yet this year’s permit total fell short of household growth, which is estimated at between 220,000 and 250,000 households in 2004.