Real Estate Article: Record Breaking Real Estate Statistics of 2004
01/12/2005

The housing market of California in 2004 was directionless and inconsistent. At times it was rapidly rising and other times hitting rock bottom. Although the market was unsteady, it set numerous records, giving us reason to believe that we should pay close attention to trends that may occur in 2005.

The records of the 2004 estate market included:

(All information presented below was provided by C.A.R. - the California Association of Realtors)

1. A 3 percent increase over the previous year’s sales record resulting at roughly 602,000 detached homes.
2. The annual median price of a single-family home in 2004 ended up exceeding $450,000, 22 percent higher than that of 2003.
3. This is also the third consecutive year that the median price has increased by double digits.
4. The Unsold Inventory Index reached an all-time low of just 1.5 months in April.
5. Housing Affordability Index fell to 19 percent in May and stayed between 18 and 19 percent throughout the year. The last time the numbers were that low was back in 1989.
6. The affordability gap between California and United States reached an all-time high of 36 percent.
7. The number of permits issued for building homes in 2004 reach over 206,000 which is second only to 238,000 in 1989. This was still short of the household growth which was estimated to be between 220,000 and 250,000.
8. First-time homebuyers’ share of the total market dropped to an all-time low of only 26 percent.
9. Internet use of the buying and selling of homes has increased tremendously. According to C.A.R.’s Versus Traditional Buyers Survey, 56 percent of all buyers used the internet in some way as part of their purchasing process while 47 percent of home-sellers utilized the internet for selling their homes. This is the first time numbers surpassed the 50 percent mark for buyers and a dramatic increase of from 12 percent.
10. The Boomer Generation had great influence over the market in 2004 accounting for 3 out of ever 4 sales.

Although we can learn a great deal by paying attention to the statistics of 2004, no one can be sure how 2005 will turn out. The unsold inventory index in April of 2004, at an all-time low of 1.5 months, eventually lead to prices increasing, but by August, the unsold inventory index had hit an all-time high of over 3 months and this impacted the housing market with a tremendous decline of prices. Although California’s median price consecutively grew in double digits for three years, the fact is that at certain times of the year, the prices were dropping rapidly. Although the overall year end statistics displayed increasing prices, at certain periods of time in between the year prices were still falling. When you analyze statistics, you mustn’t misunderstand its meaning. If somebody reviewed the national statistics of the real estate market, they might notice numbers and percentages that are the complete opposite of the area their situated in. Statistics for the nation as a whole represents the average of each of the 50 states which represents the average of all the cities in that state. Just because the real estate market is doing well nationally doesn’t mean that California’s market is. Just because California’s market is doing well doesn’t mean that every city’s in California is doing well and vice versa. It is very easy to misunderstand the information that is provided by the numbers and percentages of statistics.

In order to protect yourself from these types of situations, you must learn how to review statistics. It is easier with the aid of an experienced professional who specializes in whichever area is relevant. Someone who has carefully kept tabs on all the statistics on a specific area and can provide you with the details on any changes that occur and guide you to make the right decisions and make sure you don’t miss any opportunities you come across.

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