There’s a big divide in California’s housing market

California’s housing market is moving in two different directions.

Luxury homes in the first quarter sold at the fastest pace ever for the first three months of the year. But sales of houses priced under $500,000 fell to a nine-year low, according to a recent report from CoreLogic.

Wealthier buyers, shopping for homes worth $1 million and greater, were attracted to the housing market as the stock market rose to record highs, CoreLogic’s Andrew LePage said.

There’s a historical correlation between the stock market and luxury home sales, LePage added. Some profits earned from the market are reinvested into property, and in some cases, buyers have greater confidence because their portfolio gains make them feel wealthier.

The 10,562 luxury homes that sold in the first quarter were smaller on average and located on smaller lots relative to the past decade, LePage said. This shortage in urban centers, especially downtown, is helping to drive up prices, and restricting the amount of new inventory that homebuilders can add to the market.

California is home to some of the nation’s most expensive housing markets, including San Francisco and San Jose.

The national S&P CoreLogic Case-Shiller national home price index set a fourth-consecutive high in February, the most recent month of data released.

“We aren’t in a bubble, and won’t be entering one anytime soon,” said Svenja Gudell, Zillow’s chief economist, in a report Thursday showing that the real estate company’s home value index surpassed the pre-recession peak in April.

“There are big differences between the market then and the market now: Then, loose credit, speculation and overbuilding were ingredients in a recipe for disaster. Now, healthy home buyer demand is being driven largely by a stable economy and demographic tailwinds, which is exactly what we would expect in a healthy market.”

But it’s a tight market for buyers hunting for starter homes. The shortage of affordable housing is slowing the pace of existing-home sales. A report from the National Association of Realtors on Wednesday showed that existing homes in April were on the market for the fewest days on record amid “stubbornly low supply levels.”