A report recently released by Metrostudy on the state of the housing market in California Central Valley reveals good news. Building activity is at the highest level in eight years with annual home starts up 22 percent over the previous year and annual closings up 27 percent.
• Merced County saw the highest gains in annual starts at 134 percent.
• San Joaquin County is up 38 percent and Kings County is up 26 percent.
• The lowest increases were in Tulare County at 17 percent and Kern County at 6 percent.
Although the typical reaction for such high demand is to increase prices, many builders see their own offerings as reaching affordability limits and are thus reluctant to raise prices. The average base price for a new single-family detached home is only up 4 percent to $334,000.
The California Association of Realtors show sales increased 8.9 percent in the past year for single-family homes in Tulare County. The median price of a single-family home is $211,820, which represents a 9.1 percent increase over the past year. Note that this covers both new and used properties.
Unsold inventory dropped by 14.7 percent over the past year to 3.3 months. This represents the amount of time it would take to sell the remaining homes at current rates.
In Kings County, the median price for single-family homes increased 8.1 percent to $211,110. Home sales have dropped by 20.4 percent over the year. The median time on the market for a single-family home went down by 10.4 percent to 26 days.
San Joaquin County
Home sales have also dropped by 1.9 percent in San Joaquin County although median prices for single-family homes have increased by 6 percent to $313,810. Unsold inventory is at 2.7 months, which represents a slight increase of 0.1 percent over the year. Median time on the market has dropped by 8.3 percent to 21 days.
Although we currently have no offerings in Merced County, information about it is included for comparison, since it shows the highest annual gain in building activity. The median price of a home is $207,580, an increase of 0.7 percent over the past year. Home sales have increased by 12.6 percent resulting in an unsold inventory of 2.7 months, which represents a drop of 29 percent over the year. The median time on a market for single have family homes also went down by 22.1 percent to 25 days.
Many of these increases are being driven by a growing state economy. The California Association of Realtors predicts that for 2016, existing home sales in the state will increase by 3 percent to 5.4 million with median prices going up by 4.5 percent to $232,500. Nonfarm job growth will go up by 2.3 percent as the unemployment rate drops from 6.2 percent to 5.5 percent. Disposable income will increase by 4.3 percent.