Home prices in Southern California leveled off last month as buyers responded to rising mortgage rates and rising inflation, with sales plummeting 16% from previous year levels.
Last month’s sales were one of the lowest in May in a record dating back to 1988.
“The market has changed,” said Katherine Orth of Sierra Madre, a broker associate at DPP Real Estate. “It’s not like a bubble burst. It’s like a stomach punch …. Sellers are starting to realize that the party is over.”
Data firm DQ News released CoreLogic figures on Wednesday, June 15th, with median homes in Southern California, the midpoint of all sales, at $ 760,000, unchanged from April’s highs. did.
Last month’s median rose 13.4%, or $ 90,000, from May 2021.
Meanwhile, sales fell to 20,470 transactions last month, down 4.8% from April and down 16.2% year-on-year.
Prices and sales usually rise from April to May.
“It’s no exaggeration to say that prices have leveled off, given how much interest rates have risen,” said Taylormer, Deputy Chief Economist at Redfin. “These higher interest rates will put a lot of pressure on home prices.”
According to government-backed mortgage giant Freddie Mac, the average interest rate on a typical 30-year fixed mortgage was just under 3 percent by 2021, but has risen by more than 2 percent in just five months. It became more than 5%.
The May housing figures are the first to reflect the full impact of the rise in mercury on prices and sales.
Due to the double pain of rising home prices and rising mortgage rates, typical home payments, excluding taxes and insurance, increased by at least $ 40% from $ 2,269 a month last year to $ 3,188 a month. ..
“The Fed has awakened to the fact that inflation is not a temporary or temporary phenomenon,” said Daniel Hale, Chief Economist at Realtor.com. “The way to influence the home market is to have high mortgage rates, which is actually digging into the purchasing power of homebuyers this year.”
The surge in home payments caused a chain reaction in the market, curbing transactions and increasing inventory on the list for sale. According to Zillow, Southern California’s list rose 29% last month to 34,193 units after falling to a low for the first time in 18 years last winter.
“There are signs that demand is softening,” Hale said. “We have more sellers, but some buyers are a little more selective, and more homes are on the market.”
While listings remain low by historical standards, agents report that home sales take longer, fewer buyers abandon mortgage and appraisal contingencies, and fewer participate in bidding wars. As the market slows, Steve Thomas of ReportsOnHousing said:
The two-bedroom town home in Aliso Viejo sold $ 852,000 last month, or $ 27,000 above the asking price, after a small bidding war between two competing buyers. Four months ago, the same town home received at least 8-15 offers, says list agent Karian. Lightson of the compass.
“What we’ve experienced before was such an anomaly. People were really dialed at this enthusiastic pace,” Wrightson said. “We are back in what is called the normal market, where it takes time to sell a home.”
She said she stopped seeing homes selling $ 50,000 to $ 100,000 above the asking price while prices weren’t falling.
The reality is beginning to sink among sellers.
Redfin numbers show that more home retailers are lowering their asking prices. According to Ma, about 21% of Los Angeles County sellers and about 28% of Orange County and Inland Empire sellers dropped their listing prices last month, compared to a 10% drop in May 2021.
“All of these areas have seen a fairly dramatic increase in price cuts and may continue to increase,” Ma said.
Redfin’s numbers further show that the highest prices homeshoppers are looking for during online searches are no longer rising. Perhaps an early indicator that prices will begin to level off in the coming months.
Meanwhile, Hale revised this year’s housing forecasts based on rising mortgages and inflation.
She predicted that buyers would continue to slow the market during the summer “Keep away from the market.” By the end of the year, US home prices will rise by just 6.6% compared to last year’s double-digit pace.
As inventory of homes for sale continues to grow, she said, frustrated homebuyers could be an “opportunity” to find the kind of property they’ve escaped from.
For now, buyers are waiting to see what happens next, Oath said.
“Today’s market is quite different from what we saw in the May market,” she said. “We were talking at an office meeting this morning about how the market has changed dramatically. Demand is still there, but buyers are afraid that interest rates will continue to rise.”
The county breakdown of median home prices and sales is the change in percentages from last year.
— The median of Los Angeles County rose 11.0% to $ 860,000. Sales were down 16.1% to 6,550 transactions.
— The median Orange County rose 17.8% to $ 1,054,500. Sales were down 23.7% to 2,951.
— The median Riverside County rose 19.2% to $ 598,500. Sales were down 12.3% to 3,849.
— The median of San Bernardino County rose 20.4% to $ 520,000. Sales were down 9.2% to 2,715.
— The median of San Diego County rose 17.2% to $ 850,000. Sales were down 17.5% to 3,493 transactions.
— The median of Ventura County rose 13.5% to $ 794,250. Sales were down 19.1% to 912.
SCNG business columnist Jonathan Lansner contributed to this report.