Home prices across Southern California have slipped for the sixth straight month, the result of increasing monthly mortgage rates.
Prices in the lower half of the state fell for a sixth straight month in November, wiping out most of the price gains during the first half of 2022, the Orange County Register reported, citing CoreLogic data.
The median price of a Southland home dropped to $690,000 in November, up $10,000 from year-ago prices, according to CoreLogic. The median price was down $70,000, or 9 percent, from the all-time high of $760,000 reached in April and May.
While home prices increased on an annual basis, last month’s 1.5 percent year-over-year gain was the smallest in three years. By comparison, annual gains across SoCal averaged 11 percent for the past two years.
Southern California home sales, meanwhile, fell to 13,016 in November, CoreLogic reported.
That’s the smallest sales tally for a November, and 13th smallest for any month, in 35 years. It was the 12th straight month of year-over-year sales drops, with 44 percent fewer transactions than in November 2021.
“It’s shifting. People are shifting their mindsets,” Darin Eppich, an agent with Sotheby’s International Realty in Beverly Hills, told the newspaper. “A lot of it is (interest) rates, and a lot of it is the monthly (mortgage payment). So, those buyers are waiting till the New Year.”
Real estate trends in Southern California match what’s happening across the state and nation.
Home sales fell 47.7 percent from November 2021 in California, according to the state Realtor association, while the National Association of Realtors reported a 35.4 percent sales drop nationwide from the previous year.
“In essence, the residential real estate market was frozen in November, resembling the sales activity seen during the COVID-19 economic lockdowns in 2020,” NAR Chief Economist Lawrence Yun told the Register.
The main factor was the rapid increase in mortgage rates, which hurt housing affordability, Yun said.
Rates more than doubled in 2022 to more than 7 percent before dropping slightly, causing November’s monthly house payment for a median-priced Southern California home to jump $1,247 from the year before. That’s a 53 percent increase in the “monthly nut.”
Rate shock turned the 2020-21 buying frenzy into a freeze, sending buyers and sellers alike into their separate corners to wait out the slowdown.
“The short and sweet takeaway right here,” said Boyd Roberts, broker-owner of Laguna Gallery Real Estate, “ … (is) there’s almost no buyers out there.”
New home sales also played a key role in the November housing market.
CoreLogic reported 1,955 new homes (which tend to cost more) sold last month, accounting for 15 percent of all homes sold in November. That’s the biggest new-home share since March 2008.
The reason: builders are giving buyers better deals, said Irvine-based real estate consultant John Burns. Builders have been heavily discounting their sale prices and helping buyers “pay down” their mortgage rates since June, he said.
Between November 2021 and last November, home prices in Los Angeles County rose by 0.5 percent, with 44 percent fewer sales, according to CoreLogic. In Orange County, prices rose 4.9 percent, with 45 percent fewer sales. Riverside and San Bernardino county prices rose by 2.2 percent and 0.9 percent, respectively, with 46 percent and 45 percent fewer sales.
— Dana Bartholomew
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