Southern California home prices jumped 11% in November and sales increased by 19% from last year’s levels as a robust market streak continued to defy the coronavirus pandemic that saddled the region with high unemployment, a new housing report shows.
Ultra-low mortgage rates, a pandemic-induced desire for bigger homes and an increase in population entering their homebuying years are some of the main reasons housing experts give for why 2020 will cap eight years of steady housing market growth.
The median price of a Southern California home – or the price at the midpoint of all sales – was $603,000 last month, up 10.8% from November 2019, DQ News reported Thursday, Dec. 17, based on figures from real estate data firm CoreLogic.
That’s the third highest median in records dating back to 1988.
November sales increased 18.9% to 21,777 transactions, the highest tally for a November in 14 years.
“These numbers are not surprising at all given tremendous demand that has grown substantially since May,” said Steve Thomas, author of Reports on Housing. “The low interest rate environment has fueled this wave of activity. … Today’s 2.67% rate increases buyers’ purchasing power and make real estate a lot more affordable.”
Economists predict rates will remain just above 3% at least through 2021, if not for the next two years.
Millennials are now entering the age when people typically buy their first home, said Jeff Tucker, senior economist for Zillow. Today’s low rates are causing more renters in their early 30’s to buy a home earlier than they otherwise might have.
“These super low rates are giving people a reason to buy right now,” Tucker said. “The mortgage rates tipped the scales toward making owning more affordable compared to renting.”
With the number of homes for sale at the lowest level since mid-2005, bidding wars continue unabated, with homes priced under $1 million typically selling within two weeks, one agent said.
“Homes still are selling very quickly, especially for this time of year,” Tucker said. “It’s a barometer of how much more demand there is.”
Just under 22,000 Southern California homes were on the market as of last week, compared with 34,555 listings a year earlier, according to Reports on Housing. Inventory remains low even though more homeowners are putting their properties on the market. Thomas reported a 15% increase in new listings in Orange County last month.
“Even with the recent surge in COVID-19 cases, homeowners are still being lured into selling their homes,” Thomas wrote.
Home prices and sales softened slightly from October’s red-hot pace, which is typical this time of year as buyers and sellers drift away from the market over the holiday season. That said, this past November has been hotter than usual, with sales and price appreciation 5% above average for the month.
After the pandemic put the brakes on the traditional homebuying season last spring, demand shifted until later in year and “extended all the way through November,” Zillow’s Tucker said.
Price and sale gains occurred in all six Southern California counties last month, with double-digit sales gains across the board.
With residents able to work from anywhere, home shoppers flocked to more affordable markets in the Inland Empire. San Bernardino County had a sales gain of 25.7% last month, the biggest increase in the region. Riverside County had the third-biggest gain with sales up 20.1%.
The Inland Empire also had some of the region’s highest price appreciation: Up 14.3% in San Bernardino County and 12.3% in Riverside County.
“It has a lot to do with (home shoppers wanting) their own sense of personal space,” said Baron Bershaw, an agent with Re/Max Terrasol in Huntington Beach. Families want “more space, bigger lots and bigger houses. … If you’re going to do everything at home, and you’re not spending your entertainment budget to go out, they can afford to put a little more into their house.”
L.A. County still had a high appreciation rate at 12.2%, buoyed by double-digit price gains in communities like El Segundo (up 14%, according to Zillow), San Fernando (up 13.9%) and Inglewood (up 13.4%).
“Looking into the future, this kind of double-digit price appreciation can’t go on forever,” Tucker said. “If rates were to rise again, that would cause price appreciation to cool off. … Even rising to 3.25%, even that would cool price appreciation a little bit — especially for a market like L.A., where prices are so high relative to incomes.”
Regional sales: 21,777 residences — new and existing — sold in November in six SoCal counties. Best November in 14 years. Up 18.9% in a year. Year to date there have been 208,028 sales — 1% off 2019.
Price: SoCal’s median was $603,000 — up 10.8% over 12 months. Record high? $610,000 set in September.
Single-family houses: 14,932 sold in the six counties, up 20.0% in a year. The median selling price was $650,000 — a 14.0% increase over 12 months.
Condos: 4,883 sales across the region, up 33.1% over 12 months. Median? $500,250 — a 9.2% increase in a year.
Newly built: Local builders sold 1,962 new homes, down 10.9% in a year. Median? $587,500 — a 3.2% increase over 12 months.
Builder share: 9% of SoCal sales vs. 12% a year earlier. Between 1988 and 2018, new homes accounted for 13.4% of all homes purchased.
Los Angeles County: 6,707 sales, up 13.1% over 12 months. Year to date there have been 63,023 Los Angeles County sales — down 6% vs. 2019. Median? $700,000 — after a 12.2% year’s increase.
Orange County: 3,302 sold, up 19.4%. Year to date there have been 31,326 Orange County purchases — up 2% vs. 2019. Median? SoCal’s highest at $799,500 — after a 8.2% increase.
Riverside County: 3,894 sales, up 20.1%. Year to date there have been 37,984 Riverside County sales — down 1% vs. 2019. Median? $455,000 (record high) — after a 12.3% increase.
San Bernardino County: 2,994 sold, up 25.7%. Year to date there have been 28,542 San Bernardino County purchases — up 4.4% vs. 2019. Median? SoCal’s cheapest at $400,000 (ties record) — after a 14.3% increase.
San Diego County: 3,909 sales, up 23%. Year to date there have been 38,071 purchases — up 3% vs. 2019. Median? $650,000 (ties record) — after a 9.3% increase.
Ventura County: 971 sold, up 18.4%. Year to date there have been 9,311 sales — down 0% vs. 2019. Median? $663,750 — after a 14.4% increase.
Source: Orange County Register