Has California housing become a buyer’s market?

Has California housing become a buyer’s market with sellers losing control of pricing?

My trusty spreadsheet reviewed a relatively new homebuying metric from Redfin that attempts to quantify the marketplace mystery: how many house hunters are looking to buy.

Redfin combines the easily calculated supply number – homes listed for sale – with some statistical wizardry to estimate the corresponding number of potential buyers. Gauging demand is the toughest core in almost any industry. Redfin’s calculations seem far better than those from gurus who mistakenly tell you that recent sales equal demand.

The latest results from December track 50 major U.S. markets – including eight from California. It’s relatively good news for house hunters.

By Redfin math, those eight Golden State markets had 35% more sellers – 72,840 vs. 54,045 buyers.

Redfin calls any market with at least 10% more sellers than buyers a buyer’s market. When there are at least 10% more buyers, that’s a seller’s market. In between is seen as balanced.

The 44 markets in the rest of the nation leaned even more heavily toward house hunters, with 43% more sellers: 617,753 vs. 433,119 buyers, also a buyer’s market.

Those extra choices should cheer house hunters and worry sellers about added competition. Of the 50 U.S. markets tracked, Redfin saw 36 favoring buyers.

Just five markets favor sellers – New York’s Nassau County, two from New Jersey (New Brunswick and Newark), Pennsylvania’s Montgomery County, and Milwaukee. Nine got a balanced rating.

Data debate

Redfin’s decidedly dour scorecard is controversial among industry gurus who have long defined the buyer/seller battle with curious calculations largely tied to a sales-to-listings ratio.

Such math showed that just 11 of 50 major U.S. markets were in a buyer’s market, according to a recent tally by Realtor.com. That was an increase from seven.

And Zillow’s own twist on this debate found that only four of 49 U.S. metros favored buyers in its latest report.

By any measurement, homes are steeply overvalued. To my eye, these old-school buyer/seller metrics give property owners an incorrect sense of their market clout.

Sellers’ reluctance to cut their asking prices in an unaffordable housing world is a key reason why sales activity is running near generational lows.

Split Golden State

Redfin stats portray California as a split picture, too.

The four Southern California markets had a combined 41% more sellers – 54,869 vs. 39,039 buyers.

The buyer’s edge was muted in Northern California. It’s four had 20% more sellers – 17,971 vs. 15,006 buyers.

And when you ponder the eight California markets, only two didn’t favor buyers – San Francisco and San Jose were balanced.

The booming artificial intelligence business is giving the Bay Area’s tech industry a major boost, creating more homebuyers in a notoriously tough market.

Here are the eight Golden State markets, ranked by their buyer-seller gaps …

Inland Empire: 54% more sellers (17th largest gap of the 50 markets) – 18,583 vs. 12,081 buyers – a buyer’s market.

Los Angeles County: 46% more sellers (No. 21 of 50) – 21,619 vs. 14,848 buyers – a buyer’s market.

San Diego: 22% more sellers (No. 32 of 50) – 7,724 vs. 6,351 buyers – a buyer’s market.

Orange County: 21% more sellers (No. 33 of 50) – 6,943 vs. 5,759 buyers – a buyer’s market.

Sacramento: 32% more sellers (No. 26 of 50) – 7,345 vs. 5,577 buyers – a buyer’s market.

Oakland: 28% more sellers (No. 27 of 50) – 5,712 vs. 4,468 buyers – a buyer’s market.

San Jose: one more seller, yes one (No. 41 of 50) – 2,486 vs. 2,485 buyers – a balanced market.

San Francisco: 2% fewer buyers (No. 43 of 50) – 2,428 vs. 2,476 buyers – a balanced market.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com