Southern California Home Sales Plunge in May, But Market Shows Signs of Recovery

Southern California home sales took a major hit last month due to the coronavirus lockdown, with closed deals dropping by 45% in May. This resulted in the lowest number of home sales for the month of May in the last three decades. However, agents and market watchers are optimistic that the worst may be over, as sales are starting to pick up again and record-low mortgage rates are attracting buyers back into the market.

Despite the decrease in sales, home prices in Southern California actually increased during the lockdown. The median price of a home in the region rose to $540,000, just $10,000 shy of the all-time high. This increase in prices can be attributed to the limited inventory of homes for sale and the high demand from buyers.

One example of how the coronavirus disrupted the market is a home in north San Bernardino that was sold in mid-May. The buyer initially agreed to purchase the home for $408,000, but due to financial constraints caused by the stock market crash, the deal had to be renegotiated. The seller ended up dropping the price by $8,000 and covering $5,000 of the buyer’s closing costs to close the deal.

The resurgence in the market can be attributed to the record-low mortgage rates, with the average rate for a 30-year fixed mortgage dropping to 3.13%. This has led to a surge in home-purchase loan applications and an increase in pending sales for real estate agencies.

While the market is showing signs of recovery, experts predict that a full recovery may not occur until the second half of 2021. This year is expected to end with a 10-12% drop in home sales compared to 2019, and a 2-3% drop in prices. However, with the current low inventory and high demand, Southern California’s housing market is expected to remain competitive for the foreseeable future.