California

California housing market officially now ‘weak.’ Is it an early warning of recession?

Governor Gavin Newsom talks housing in his new budget plan

Governor Gavin Newsom releases his revised 2019-20 state budget proposal in a news conference at the State Capitol.
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Governor Gavin Newsom releases his revised 2019-20 state budget proposal in a news conference at the State Capitol.

The once red-hot California housing sales market is officially now “weak,” state analysts say, but the year-long flattening does not necessarily suggest the state is headed toward an economic downturn.

In a brief report issued Monday, the state Legislative Analyst’s Office weighed in on the latest California home sales trends, noting that homes sales statewide in June were down from the same month last year, and notably lower than historic norms.

“Home sales were on a clear downward trend during the second half of 2018 and the beginning of 2019,” analysts wrote. “Sales seem to have stabilized in recent months and are no longer declining from month to month.

“Nonetheless, sales remain relatively weak, but not as weak as is typically seen before economic downturns.”

The state analysis, based on data from Zillow, the California Association of Realtors and Moody’s Analytics, estimated 25,900 non-distressed home sales statewide in May. That is below the 28,000 sales number from June of 2018, and below the “long-term historical average of 31,400 sales per month.”

Similarly, sales numbers are low in recent months in Sacramento, and sales prices have flattened as well.

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Housing prices statewide had been on a dramatic price run-up for seven years, after the recession years from 2007 to 2011, at first prompting increasing in sales as consumers sought homes before prices could go higher. Affordability levels dropped to their lowest levels in years in 2018, and by mid-year some potential buyers had backed out of the market, starting the latest cooling trend.

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Tony Bizjak has been reporting for The Bee for 30 years. He covers transportation, housing and development and previously was the paper’s City Hall beat reporter.
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