“Payment Pulse: Southern California Homebuying Reality Revealed”

Southern California’s homebuying market is facing a budget-busting reality as the typical house payment has jumped by almost 50% in just a year. The region saw the slowest sales pace on record this summer, with 54,416 residences sold from June through August, a 20% drop from the same period in 2021.

The average 30-year mortgage rate in the region was 5.38% in the three months ending in August, compared to 2.9% a year earlier. This has led to a 26% decrease in borrowing power for house hunters. The typical monthly payment for a Southern California home rose by $1,055 in a year, reaching $3,318 on a median-priced residence of $740,000.

Buyers are holding the line on prices, with median prices either flat or falling since April. However, the financial hurdle of a 20% downpayment has also increased by $12,000 over the year. In Los Angeles, the hypothetical payment on the $820,000 median is $3,677, up 41% from a year ago. Orange County sees a $4,412 payment on the $984,000 median, a 47% increase.

The long-running trend of cheaper mortgages has impacted home values, with the six-county median rising at an average 5.2% annual pace since 1988. However, the typical house payment for a buyer has only risen by an average of 3.6% yearly, thanks to lower financing rates. With mortgage rates on the rise and the Federal Reserve using rate hikes to combat inflation, the future of the housing market remains uncertain.

As September’s mortgage rates near a full percentage point higher, the market is bracing for further impacts on affordability and sales. The question remains: how will Southern California’s homebuying market weather this storm of rising costs and slowing sales?