Southern California Home Sales Plummet as High Mortgage Rates Take Toll

Home sales across Southern California have hit a historic low, with the number of deals dropping by almost half in April. According to the Orange County Register, buyers closed on 13,201 single-family homes and condos, marking a 46 percent decrease from the previous year.

This significant decline in home sales is the third largest year-over-year drop since records began in 1988. The main culprit behind this downturn is high mortgage rates, which have led to the slowest-selling April in 35 years. In fact, it was the 18th worst sales month total on record.

Sales in various counties across the region have also taken a hit, with San Bernardino experiencing a 68 percent decrease, Ventura 59 percent, San Diego 52 percent, Los Angeles 39 percent, Orange 35 percent, and Riverside 39 percent.

In the past year, only 182,593 homes changed hands in Southern California – the lowest 12-month total since the 2008 market crash. The high price of homes, low affordability, limited inventory, and a lack of new construction have all contributed to this home sales slump.

The median price of homes in April was $735,000, up 4.3 percent from the previous month but down 2 percent from the previous year. This decrease is attributed to the Federal Reserve’s decision to raise interest rates last March to combat inflation, making it harder for potential buyers to qualify for mortgages.

According to the California Association of Realtors, a Southern California household needed to earn $178,400 a year in the last quarter to afford a median-priced single-family house, a 22 percent increase from the previous year. As a result, only 19 percent of Southern California residents can now afford to buy a home, down from 24 percent a year ago.

Many homeowners are also hesitant to sell their homes due to financial constraints or the desire to hold onto low mortgage rates. The Southern California market currently has a 2.5 month supply of single-family homes waiting to be sold, 34 percent below the average since 2008.

Overall, the Southern California housing market is facing significant challenges, with high prices, low affordability, and limited inventory hindering potential buyers. The future of the market remains uncertain as homeowners and buyers navigate these difficult conditions.