Southern California Housing Market Slump Continues: Home Sales Down 43% and Prices Fall
The housing market in Southern California took a hit this past January, with home sales plummeting to the lowest level in 35 years. According to data from CoreLogic, closed sales dropped to 9,938, a significant decrease from the average of 17,000 closings typically seen in January. This decline marks the 14th consecutive month of year-over-year sales drops.
Not only did sales suffer, but prices also took a hit. The median price of a Southern California home fell to $670,000 in January, down $90,000 from the peak price reached last spring and $500 lower than January 2022. This marks the first year-over-year price drop in almost four years.
The housing slump has been attributed to the doubling of mortgage rates last year, which has made homes less affordable for buyers. Despite lower prices, the monthly mortgage payment has increased by 38% due to higher interest rates. This has led to a standoff between buyers and sellers, with buyers expecting better deals and sellers holding out for last year’s prices.
The real estate and finance industries have also been impacted, with layoffs, mergers, and bankruptcies affecting brokerages and lenders. Loan volume fell 41% in the year ending in January, according to the Mortgage Bankers Association’s purchase mortgage index.
While some areas have seen improvements in the market, overall, the housing industry in Southern California is facing challenges. With inventory levels 31% below average and pending sales contracts down 41% from a year ago, the market is struggling to regain its footing. Buyers like Joshua Adrian of Newport Beach are finding that while prices have come down slightly, the increase in interest rates offsets any potential savings.
On a county-by-county basis, all six counties in Southern California saw decreases in sales, with three counties also experiencing year-over-year price drops. The housing market in Southern California is facing a tough road ahead as buyers and sellers navigate the challenges brought on by the current economic climate.