Guest Column: California’s Housing Market Hitting Its Stride

Published February 10, 2014

The past year has been a remarkable one for the California housing market. Sale is pending for this Sacramento home.By Leslie Appleton-Young

The past year has been a remarkable one for the California housing market. In its fifth year of recovery, demand for housing has been so strong and prices have risen so rapidly that questions were raised as to whether this might be the start of another “bubble.”

That isn’t likely.

In fact, if you aren’t one of the many households denied a mortgage, despite solid credit, you might be surprised to know that sales actually dropped 5.9% from 2012 as inventory shortages throughout the state constrained the number of transactions. The statewide median price, on the other hand, reached $407,100, 27.5% above that number for 2012 and the first time the median has been above $400,000 since 2006.

Despite the fact that the California housing market has been in recovery mode since 2009, it’s fair to say that 2013 was the year that the distressed market lost its dominance. For all of 2013, more than 80% of the sales involved existing single-family homes with traditional sellers who held equity in their homes at the time of sale. Only 5% of the December 2013 transactions were lender or bank-owned properties, a huge change from 60% at the start of 2009. Looking ahead, what can we expect in 2014?

Leslie Appleton-Young, Vice President and Chief Economist for the California Association of Realtors, is a member of the Controller's Council of Economic Advisors. The opinions in this article are presented in the spirit of spurring discussion and reflect those of the authors and not necessarily the Controller or his office.