Southern California Home Prices Experience First Decline in a Decade

After a decade of steady growth, home prices in Southern California are finally on the decline. According to data released by Zillow, the typical home price in the region has dropped nearly 6% from its all-time high in May. This marks the fourth consecutive month of price declines, a trend not seen since early 2012.

The main culprit behind this shift is the rise in mortgage rates, which have soared to over 6.6% for a 30-year fixed-rate mortgage. This sharp increase has drastically reduced what buyers can afford, leading to a significant drop in demand and sales.

Real estate experts are calling this a turning point for the market. While they don’t expect a repeat of the Great Recession, they do anticipate further price declines in the coming months. In fact, some analysts predict that prices could continue to fall through 2023.

For many potential buyers, the current market conditions have made homeownership out of reach. Rising interest rates have pushed monthly payments beyond their means, forcing them to reconsider their options. Some have chosen to continue renting, while others have shifted their focus to other investments.

Despite the price declines, experts believe that the market will stabilize once interest rates settle. However, with rates climbing towards 7%, some are revising their forecasts for the future. While these price declines may not reach the levels seen during the Great Recession, they are still significant and could have a lasting impact on the housing market in Southern California.