Southern California home prices kept rising this summer, but sales fell as questions grow over whether the torrid housing market is finally cooling.
Excerpted from Los Angeles Times
The median sales price in the six-county region rose to $535,000, up 1% from July, research firm CoreLogic said Wednesday. The median — the point at which half the homes sold for more and half for less — was up 7% from a year earlier and just shy of the all-time high of $537,000 reached in June.
Sales, however, fell 8% from August 2017. The drop-off came even though more homes were on the market, an indication that sky-high prices and rising mortgage rates are crimping demand.
Real estate agents said buyers seem to be pulling back, but it’s difficult to tell whether there’s a true shift in the market or whether it’s more of a typical seasonal slowdown. Demand often tapers off in late summer and fall and doesn’t pick up again until spring, a time when it’s easier for families to find a home and move before their kids have to return to school.
Furthermore, during the six-year climb in prices, there have been moments when the market paused, even in spring, and then accelerated again.
“There is a lot of talk of, ‘Is the market softening?’” said Anselm Clinard, a real estate agent who specializes in northeast Los Angeles. “I think it is a little too early to tell.”
For now, some real estate agents said they are dealing with more supply and less demand.
Tregg Rustad, an agent who specializes in Los Angeles County’s Westside, said the dynamic is most noticeable on the high end — particularly for homes whose sellers are trying for what he called aspirational pricing. He said a house he listed in Santa Monica for $3 million has sat for two months with no serious bids.
“In the past, it might have sold,” Rustad said.
Agent Kim Ho, who finds fixer-uppers in more affordable communities in and around Downey for investors, said those investors are passing on more deals because the homes they have renovated are taking longer to sell.
“I have seen them be a lot more cautious in the past couple of months,” Ho said.
One reason for a softening could be that people simply have less buying power. The average rate for a 30-year fixed mortgage is 4.65%, up nearly a percentage point from a year ago, according to Freddie Mac. The rise would’ve added about $200 a month to what previously would’ve been a $2,666 monthly mortgage payment for a $535,000 house.
There also are more homes for sale, though inventory remains extremely tight.
Overall, the number of homes on the market in Southern California at the end of August was up 7% from a year earlier, according to Redfin. The number of listings was up 4.8% in July and 3.3% in June, two months when most of the August sales would have opened escrow.
As inventory grows, price cuts are becoming more common in all six Southern California counties compared with a year earlier, Zillow data shows, indicating more than seasonal factors could be at play.
What it Means for You
How does this apply to consumers? It’s a buyer’s market, and a great time to get started on a home loan application! Call WCC at (800) 683-4481 to speak with a loan officer.
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