Wildfires Threaten SoCal Housing Markets Already Struggling with Unaffordability, Inventory

What a year: devastating hurricanes in Florida, Texas and Puerto Rico; massive wildfires in northern and southern California.

On the latter, said Redfin, Seattle, housing in the already-delicate California markets are showing the effects of those wildfires. It reported the Sonoma County, Calif., housing market felt impact of October wildfires as inventory plunged 47 percent in November. San Jose prices climbed 23 percent and competition reached new heights in November. In Ventura and Santa Barbara counties, where wildfires are threatening homes, inventory has declined by double-digits for three months straight and fires could worsen the inventory shortage, Redfin said.

Nationally, Redfin reported national home prices rose by 7.8 percent in November, while inventory declined 12.8 percent, the 26th consecutive monthly drop. The median sale price rose to $292,000 across markets Redfin serves, while sales fell by 1.3 percent.

“Overall, 2017 has been an uneven year for home sales,” said Redfin chief economist Nela Richardson. “The year started out strong, but a combination of low inventory and weather events overtook sales growth; sales have been flat to declining in six out of the past 11 months,”

The good news, Richardson noted, is markets have been quick to recover from severe weather events, even as challenges remain. “For example, Houston home sales were up 4.3 percent in November from a year ago, and Tampa sales were up 6.1 percent,” she said. “We are hopeful that Southern California markets show the same level of resilience in the aftermath of wildfires there.”

Redfin reported the number of homes newly listed for sale in November increased a modest 1.1 percent, to 3.1 months’ supply, well below the six months’ supply considered to be “balanced” between sellers and buyers. Nationally, the typical home spent 46 days on the market, four days fewer than last November.

“Any increase in new listings is welcome news for buyers,” Richardson said. “However, the number of homes put on the market in November wasn’t enough to put a dent in the long-standing inventory shortage.”

The report noted in parts of Los Angeles, Ventura and Santa Barbara counties, hundreds of homes have been destroyed by wildfires and hundreds more are under threat from fires that remain uncontained. “While it is too early to know how many families and homes will be impacted, we do know these counties are already facing a shortage of homes for sale,” Richardson said. “Families who are displaced by the wildfires will find it challenging to find another home for sale nearby.”

Redfin reported in Ventura County, inventory fell by 17.6 percent in November, while prices grew 9.8 percent year over year to a median of $600,000. In Santa Barbara County, inventory fell by 23.3 percent and prices grew 6.8 percent year over year to a median of $575,000. “The fires will cause further stress in an already tight housing market,” Richardson said.

The impact of October wildfires in Northern California was seen in November market data. In Santa Rosa, one of the hardest hit cities, inventory fell 46.6 percent in November from a year prior, a 27.8 percent drop from October. Across Sonoma County, inventory declined 31.2 percent year over year and prices rose 15.2 percent to a median of $633,000. The typical home in Sonoma County sold for 101.6 percent of the asking price, the highest sale-to-list price ratio since 2013. This spike in competition is unusual for the November market and likely related to the fires.

Redfin said the most competitive market in November was San Jose, where 75.9% of homes sold above list price, followed by 73.1% in San Francisco, 66.0% in Oakland, 43.5% in Seattle and 42.0% in Tacoma, Wash. The average sale-to-list price ratio in San Jose was 107.9 percent, the highest on record in that market since Redfin began tracking data in 2009.

Other report highlights:

–San Jose and Seattle were the fastest markets at 12 median days on market, followed by Oakland (14), Boston (15) and San Francisco (17).
–San Jose had the nation’s highest price growth, rising 23% since last year to $1,076,000. San Francisco had the second-highest growth at 18.5%, followed by Cleveland (15.9%), Seattle (15.4%), and Salt Lake City, Utah (13%). Honolulu was the only metro with a price decline in November, falling 3.2%.
–Four of 73 metros saw sales surge by double digits from last year. Richmond, Va. led the nation in year-over-year sales growth, up 14.6%, followed by Honolulu, up 14.2%. Philadelphia rounded out the top three with sales up 10.8% from a year ago.
–Allentown, Pa. saw the largest decline in sales since last year, falling 13.3%. Home sales in Grand Rapids, Mich. and Rochester, N.Y. declined by 13.1% and 11.0%, respectively.
–San Jose saw the largest decrease in overall inventory, falling 50.2% since last November. Atlanta (-32.1%), Buffalo, N.Y. (-30.4%), and Oakland (-29.1%) also saw far fewer homes available on the market than a year ago. Salt Lake City had the highest increase in the number of homes for sale, up 40.3% year over year, followed by Baton Rouge, La. (10.9%) and Austin, Texas (9.1%).