Southern California home prices powered their way to another record high this year, with the median price tipping the scales at $693,500 for the six-county region in November, new housing data shows.
It was the region’s ninth record home price this year, according to DQ News/CoreLogic figures released Thursday, Dec. 16. Four of the region’s six counties — Riverside, San Bernardino, Ventura and San Diego — also recorded new high prices.
Last month’s median home price was up 15.6% from November 2020, or $93,000 in a year. That’s the fifth-biggest 12-month price jump in records dating back to 1988, surpassed only by four busier months earlier this year.
At November’s pace, home prices rose an average of $1,800 a week during the past 12 months, pricing some buyers out of the market before they could get an offer accepted.
It’s just the latest news in a year that had one of the hottest housing markets on record. Sales for 2021 through November totaled just under 258,000, the most for that 11-month period since 2006.
November’s tally of 22,426 transactions was up 23%, the biggest one-year percentage gain in DQ News/CoreLogic records. Home prices have risen year-over-year in all but three of the past 116 months.
“To me, it’s unexplainable how everything’s gotten so crazy this year,” said Michelle Bunyan, an agent with The Olson Agency in Porter Ranch. “I’ve been in real estate since 2008, and I’ve never seen anything like this year.”
Some agents said bidding wars with three or four dozen offers were common during the height of the market frenzy last spring.
The market cooled slightly over the summer as some buyers balked at higher prices. But bidding wars continued, only with fewer buyers.
“Instead of 20 offers, you’d have 10,” said David Salmanson of Rodeo Realty in Calabasas.
Low mortgage rates, a pandemic-inspired search for bigger homes and a rising tide of millennial homebuyers fueled this year’s dramatic surge in demand.
“Buyers continue to be motivated by low mortgage rates, and maybe anticipation of higher rates is luring some buyers to purchase sooner than they were planning to,” said CoreLogic Deputy Chief Economist Selma Hepp.
While the rate for a 30-year, fixed mortgage averaged just under 8% over the past half-century, it averaged just 2.9% this year so far. Rates ticked above 3% in October.
The combination of higher prices and larger mortgage payments has cut into housing affordability. Chapman University’s single-family affordability index dropped by more than 11% since June.
The coming of age of the millennial generation is a major driver of this year’s surging homebuyer demand as more people in the 24- to 40-year-old age group get married and have children.
Millennials accounted for 51% of all purchase mortgage applications during the past two years, up from 35% in 2015, according to CoreLogic data first reported by the Wall Street Journal. The share of home sales to Baby Boomers and Gen X buyers, meanwhile, fell 8-10 percentage points to 14% and 29% respectively.
Although sales and price gains traditionally start tapering during the Thanksgiving to New Year’s holiday season, Hepp said this year’s seasonal slowing is much smaller than in previous years. For example, home sales typically decrease 15% from October to November, she said. This year, sales decreased just 2%.
She noted also that Southern California’s housing market faces more constraints than in other parts of the country. For example, the number of Southern California homes for sale took another dip starting in mid-October, dropping to the lowest number in at least nine years, figures from Orange County-based Reports On Housing show. The region had one-third fewer listings as of Dec. 10 than a year ago and half as many as in December 2019.
Salmanson, the Calabasas agent, noted there are just 25 homes for sale in West Hills, an area that typically has at least 50 or more homes on the market.
“When there are (few) options and you’re trying to get your family into a house, you do what you have to do to try to get in,” he said.
Bunyan said she listed one house in Chatsworth that had nonstop showings and 10 offers within 24 hours. It ended up selling last month for $960,000, or $91,000 over the asking price.
Housing economists predict the market will be less frenzied next year as rising mortgage rates suppress buyer demand and more homes come up for sale. In addition, the end of mortgage forbearance will mean some financially strapped homeowners could be forced to sell, increasing the supply of homes for sale.
While most economists don’t foresee home price drops in 2022, price gains, at best, will fall to the single digits.
According to CoreLogic HPI Forecast, California prices will rise 5.3% by next October, while prices will rise 1.9% in Los Angeles County and 7.6% in San Diego County, Hepp said.
Here’s a breakdown of median home prices and sales by county for November:
— Los Angeles County’s median rose 12.6% to $788,000; sales were up 7.7% to 7,234 transactions.
— Orange County’s median rose 14.9% to $919,000; sales were down 3.5% to 3,181 transactions.
— Riverside County’s median rose 20.2% to $546,750; sales were up 2.5% to 4,197 transactions.
— San Bernardino County’s median rose 18.8% to $475,000; sales were up 5.6% to 3,166 transactions.
— San Diego County’s median rose 15.4% to $750,000; sales were down 7% to 3,646 transactions.
— Ventura County’s median rose 14.6% to $755,000; sales were down 0.6% to 1,002 transactions.
Source: Orange County Register
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