Under the push of the lowest interest rates in spring in the United States, California saw a moderate increase in home sales in July, while the median home price finally dropped to under $900,000.
According to the statistics from the California Association of Realtors (C.A.R.), the seasonally adjusted annualized rate for detached homes in July reached a peak in the past five months, with a total sales volume of 279,810 units.
C.A.R. President Melanie Barker stated that although the market will enter a slower season for home buying, if the supply of homes for sale continues to improve and mortgage rates further ease in the third and fourth quarters, the housing market is expected to remain active in the coming months.
Another piece of good news for buyers is that home prices have seen a decline for two consecutive months. The median price in California in July decreased from $900,720 in the previous month to $886,560, representing a 1.6% decrease. However, compared to the same period a year ago, the median home price is still about $54,000 higher.
Market conditions vary by county. For instance, Plumas County in northeastern California saw a staggering 45% increase in median home prices last month, while Santa Barbara County, located about 100 miles north of Los Angeles and considered a top-tier housing market, experienced a 16.8% decrease in median home prices.
Experts suggest that home prices in California may continue to soften in the coming months. C.A.R.’s Chief Economist Jordan Levine said, “Improved affordability due to lower borrowing costs may motivate hesitant buyers to re-enter the market, especially as prices start to soften towards the end of the buying season.”
According to data released by Freddie Mac on August 15, the average interest rate for a 30-year fixed-rate mortgage stood at 6.49%.
On the other hand, recent changes in the traditional practices of the real estate industry in the United States have impacted buying and viewing regulations in California. Starting this week, buyers must sign a written agency agreement with a real estate agent before viewing properties.
President Barker of C.A.R. mentioned that the settlement agreement reached by NAR on March 15 regarding multiple lawsuits from home sellers has changed the home selling process that has been in place for decades, leading to confusion with various pieces of information overnight.
She summarized two key changes: “1) Listings on the Multiple Listing Service (MLS) in the United States are now prohibited from including commission information for the buyer’s agent; 2) Buyers wishing to work with an agent must sign a written agreement before visiting homes.”
“This means that before starting your house-hunting journey, you need to negotiate with your agent and clarify the scope of work they will provide; meanwhile, you also need to determine how much commission you will pay to the agent and how it will be paid,” Barker stated.
All these changes primarily stem from NAR agreeing to eliminate the long-standing 6% standard real estate transaction commission rule, which no longer mandates sellers to pay commissions to the buyer’s agent. In other words, whether to pay commission to the buyer’s agent is now the seller’s choice.
Barker admitted that adapting to these changes will take some time, “Under the new rules, consumers need to find their own way of collaborating with agents, and there will be various cooperation models among agents; many industry professionals and C.A.R. are working hard to clarify and explain the new practices as soon as possible.”