Southern California’s housing frenzy continued to cool last month, with smaller price gains and less intense bidding wars.
But buyers still competed for a limited supply of homes for sale, driving sky-high costs even higher.
The median price of a Southern California home hit an all-time high of $688,500 in September, the region’s seventh monthly record this year, DQ News/CoreLogic reported on Wednesday, Oct. 20.
Last month’s median, or price at the midpoint of all sales, was up 12.9% from September 2020 levels. But even that double-digit gain pales in comparison with the appreciation rates in the previous seven months, which got as high as 25% in May.
Meanwhile, home sales have leveled off, with 23,960 new and existing residences changing hands in September. That’s up a mere 144 transactions from the year before, or 0.6 of a percent.
Sales have decreased steadily over the past four months as the traditional homebuying season wound down and homebuyers turned their attention to other activities.
Eight months ago, homes were selling for 3-7% over asking prices, said Roger Hart, owner and broker for Forecast Realty in Torrance. Now, it’s common to see homes selling for 2% below the asking price.
“We turned the corner,” Hart said. “They’re not going $100,000 over asking. They’re not going $50,000 over asking. They’re going for asking or below.”
The slowing of median price gains could be seasonal, said Selma Hepp, deputy chief economist for Irvine-based housing data firm CoreLogic.
But buyers also are deterred by the lack of affordable homes, she said. Market demand remains strong but not frenzied, probably due to buyer fatigue and the fear of overpaying.
“Buyers are less willing to enter bidding wars and are being more conservative in their offers,” Hepp said.
This year’s buying frenzy drove “prices to the absolute top,” said Hart, who called 2021 the strongest sellers’ market of his 45-year career. But now, prices have little room for more growth, especially with rising mortgage rates further inflating home costs. “Now, they’re at the top.”
The California Association of Realtors recently predicted home prices will keep rising through 2022, but at a much more gradual pace. Instead of double-digit price gains, CAR economists predicted the median price will rise just 5.2% next year.
Nonetheless, home shoppers still have to contend with more buyers than for-sale listings, agents said.
After climbing about 25% through August, Southern California listings dipped slightly in late September, figures from Orange County-based Reports On Housing show.
“The market will stay competitive in 2022 as the normalization continues, and home prices will remain elevated,” CAR Chief Economist Jordan Levine said Monday.
Double-digit price gains occurred last month in five of Southern California’s six counties, with the biggest gains occurring in the Inland Empire, DQ News/CoreLogic reported. But sales fell in Orange, San Diego and Ventura counties.
Here’s a breakdown of September’s median prices and sales tallies by county:
— Los Angeles County’s median rose 12% to $795,000; sales were up 6.2% to 7,736 transactions.– Orange County’s median rose 13.4% to $890,000; sales were down 7.8% to 3,464 transactions.– Riverside County’s median rose 18% to $527,000; sales were up 3.2% to 4,256 transactions.– San Bernardino County’s median rose 16.8% to $463,000; sales were up 1.5% to 3,252 transactions.– San Diego County’s median rose 13.8% to $740,000; sales were down 3.9% to 4,148 transactions.– Ventura County’s median rose 9% to $725,000 ; sales were down 2.3% to 1,104 transactions.
Source: Orange County Register