Santa delivered a lump of coal to the Southern California housing market, with prices rising to even more unaffordable levels despite the sixth-lowest sales tally on record.
High mortgage rates continued to take their toll, limiting the number of buyers able to afford a typical house payment. But with the number of for-sale listings a third below average, competition remained stiff among those few buyers, driving up prices.
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Home prices in November were at or above all-time highs in four of the region’s six counties: Orange, San Bernardino, San Diego and Ventura, real estate data firm CoreLogic reported Thursday, Dec. 21. Orange County’s median home price jumped 15% in the past year to $1.1 million.
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“While sales have been weak for the past several months, a tight supply of homes for sale is keeping home prices from falling,” chief economist Jordan Levine with the California Association of Realtors said in a statement this week.
The median home price of a Southern California home, or the price at the mid-point of all sales, rose 7% year over year to $740,000, CoreLogic reported.
That comes within $10,000 of the all-time high of $750,000 reached in the spring of 2022, before rising interest rates started taking a bite out of the market.
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Prices have gone up from one month to the next in seven of the past 10 months. That’s good news for the 41,000 home sellers in the region last month, but terrible news for millennials, Gen Z home shopper and others trying to get a toehold in the market.
Sales, meanwhile, fell 4% to 12,416 transactions last month, the lowest tally since February and the smallest total for any November in records dating back to 1988, CoreLogic figures show. Sales have fallen year over year for the past 24 months.
This year is on track to be the slowest on record.
A Southern California News Group projection shows total 2023 home sales are unlikely to surpass 170,000 deals, vs. an annual average of 271,000 sales per year.
The next-slowest year on record was 2008, the year the housing market imploded. CoreLogic tallied 202,500 transactions that year, at least 32,000 more than this year’s projected total.
The slow market has taken a toll on real estate brokers, escrow and title insurance officers and mortgage providers.
Rising mortgage rates not only deterred buyers, but sellers as well.
The vast majority of homeowners have mortgages with rates at 4% or less, compared with an average of 7.2% for the past six months. Hence, those who don’t have an urgent reason to sell are hanging onto their current home and their low-rate loans.
Southern California had an average of 42,000 active listings this year, compared with an average of almost 65,000 for the previous 11 years, according to Redfin.
A forecasted drop in mortgage rates are projected to bring more buyers to the market next year.
National Association of Realtors Chief Economist Lawrence Yun predicted last week the 30-year, fixed-rate mortgage will average 6.3% in 2024 after coming within a whisker of 8% this year. Yun predicted U.S. home sales will rise 13.5% in the year ahead.
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“The demand for housing will recover from falling mortgage rates and rising income,” Yun said in a statement. “In addition, housing inventory is expected to rise by around 30% as more sellers begin to list after delaying selling over the past two years.”
The Wall Street Journal reported this week that a 1.1-percentage point rate drop since October is starting to lure some home shoppers back into the market, intensifying buyer competition. Mortgage Banker Association data show loan applications increased for six weeks on a seasonally adjusted basis, although they’re still down from a year ago, the Journal reported.
New home sales appear to be holding up slightly better than the resale of existing homes, thanks to incentives and mortgage-rate buy-downs that builders have been offering. CoreLogic figures show new home transactions were down a mere 0.3%, while resales dropped 4.6%.
Here’s a county-by-county breakdown of median prices and sales, with one-year percentage changes:
—Los Angeles County’s median rose 7.1% to $840,500; sales were down 7.0% to 3,823 transactions.
—Orange County’s median rose 14.6% to a record high of $1.1 million; sales were up 3.2% to 1,815 transactions.
—Riverside County’s median rose 1.6% to $550,000; sales were up 1.9% to 2,499 transactions.
—San Bernardino County’s median rose 12.9% to a record high of $519,500; sales were down 1.7% to 1,857 transactions.
—San Diego County’s median rose 10.9% to $850,000, matching the record high set in July; sales were down 12.6% to 1,982 transactions.
—Ventura County’s median rose 7.7% to a record high of $828,500; sales were down 8.7% to 440 transactions.
— SCNG business columnist Jonathan Lansner contributed to this report.
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