The “Looking Glass” ponders economic and real estate trends through two distinct lenses: the optimist’s “glass half-full” and the pessimist’s “glass half-empty.”
Buzz: California home prices are now 8.7% below May’s peak.
Source: My trusty spreadsheet’s review of September’s report on median selling prices for existing, single-family homes by the California Association of Realtors.
Debate: How low will pricing go as mortgage rates soar and demand wanes?
Glass half-empty
California’s median single-family home price fell to $821,680 in September, off 2.1% in the month and down 8.7% from the $900,000 all-time high set in May.
It’s a quick reversal from the pandemic era’s price boom. And keep in mind, the median is still up 42% from February 2020 – the last month before the coronavirus upended the economy.
It’s largely the same story across the state’s major markets as 28 of 51 counties tracked had one-month dips and all but one are below their price peaks.
Orange County: $1.2 million median for September is flat vs. August, down 7.3% from May and still up 36% from February 2020.
Inland Empire: $562,240 median is off 0.6% in the month, down 5.8% from May, but up 42% from February 2020.
Bay Area: $1.26 million median is off 0.5% in the month, down 16.5% from May, but up 38% from February 2020.
Central Coast: $920,000 median is off 3.2% in the month, down 7.5% from May, but up 29% from February 2020.
Central Valley: $456,000 median is off 0.9% in the month, down 8.8% from May, but up 34% from February 2020.
Far North: $380,000 median is flat in the month, down 10.6% from May, but up 27% from February 2020.
Glass half-full
The big outlier was Los Angeles County, where the median price rose 4.3% to a record $891,770 median. It’s also up 11.6% from May and 54% higher than February 2020.
I’m betting this is more a statistical quirk than any odd real estate dynamic in L.A. It’s likely the median was pushed up by a shortfall in the number of lower-priced homes sold.
What’s ahead
Skyrocketing mortgage rates along with economic unease and lofty asking prices have prompted California house hunters to rethink what they’re willing to pay in late summer. That probably won’t change this fall — or for much of next year.
The association predicts a 9% drop in the statewide median for all of 2023. In the past 12 months, this California price benchmark has risen at an 8% average annual rate.
Quotable
“High inflationary pressures will keep mortgage rates elevated, which will reduce homebuyers’ purchasing power and depress housing affordability in the upcoming year,” says Jordan Levine, the association’s chief economist.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
Source: Orange County Register
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