Despite a raging pandemic that shuttered businesses and idled workers, the Southern California housing market stumbled in 2020, then came galloping back.
Home prices continued their eight-year march upward, with 2020’s average median price rising 8.3% in the region, according to annual average figures from CoreLogic/DQ News released Friday, Jan. 22.
And home sales for the year totaled 233,289 transactions. While that’s below the average for the previous decade, the market still eked out a 1.6% gain from the year before.
Despite early expectations, 2020 was a year of bidding wars and soaring prices, as mortgages and the number of homes for sale fell.
“The market in Southern California in 2020 has been nothing short of remarkable,” said Ralph McLaughlin, chief economist for Hauz.com, a co-investment firm that helps residents buy homes. “An intense inventory shortage coupled with a low-interest-rate environment has caused local markets to skyrocket.”
The year ended on a high note as well, with the December median — or price at the midpoint of all sales — up 10.1% to $600,000, CoreLogic/DQ News figures show.
And sales soared to 24,995 transactions, up 29% and the most for any month since June 2017.
When sales tanked in April and May, many experts expected 2020 to be a dark year for housing. Indeed, tallies for the first six months were the second lowest in the past 33 years. But then the second half of the year logged the most sales for the July-to-December period since 2006.
“I thought people would be too scared to buy houses,” said USC economist Richard Green, director of the Lusk Center for Real Estate. “I certainly didn’t see a nearly double-digit increase in house prices in many places, that’s for sure.”
Economists credit record-low mortgage rates, government assistance and savings accumulated while people sheltered at home.
The 30-year fixed-rate mortgage steadily dropped throughout the year, falling a full percentage point from March and setting 16 record lows, according to Freddie Mac.
Rates on a 30-year, fixed-rate mortgage averaged 2.76% in the three months ending in December compared with 3.7% a year earlier. That translates into 13% more buying power.
For example, a buyer with a 20% down would have a monthly house payment of $1,962 a month on a $600,000 median-priced sale. A year earlier, when the median was $545,000 and rates were 1% higher, the monthly payment $2,007.
At the same time, the inventory of homes for sale fell 40% to the lowest level since early 2004 as the pandemic scared would-be sellers from the market.
Economists expect home prices to keep rising through 2020.
“The market is about to take off,” said Chris Thornberg, a founding principal of Los Angeles-based Beacon Economics. “The market’s going to be on fire this year, no doubt about it.”
Last year’s home prices were up in all six Southern California counties included in the CoreLogic/DQ News report. Annual sales numbers were up everywhere but Los Angeles County.
For December, sales and prices also showed strong growth across the board.
Here’s a breakdown of December numbers by housing type:
Single-family houses: Sales were up 33.3% to 17,163 units. The median was up 14.2% to $645,000.
Condos: Sales were up 32.3% to 5,476 units. The median was up 8.9% to $510,000.
Newly built: Sales were down -0.2% to 2,356 units. The median fell 0.1% to $576,000.
Builder share: 9.4% of SoCal sales vs. 12.2% a year earlier.
Here’s a breakdown of December numbers by county:
Los Angeles County: Sales were up 26.0% to 7,961 units. The median increased 11.4% to $700,000.
Orange County: Sales were up 17.7% to 3,611 units. The median increased 8.2% to $795,000.
Riverside County: Sales were up 39.8% to 4,903 units. The median increased 11.2% to $442,500.
San Bernardino County: Sales were up 34.7% to 3,266 units. The median increased 12.7% to $400,000.
San Diego County: Sales were up 27.1% to 4,174 units. The median increased 12.2% to $645,000.
Ventura County: Sales were up 39.7% to 1,080 units. The median increased 14.2% to $650,000.
Source: Orange County Register