Southern California Home Prices Rise Despite Record-Low Sales in November
Santa delivered a lump of coal to the Southern California housing market this holiday season, as home prices continued to soar to even more unaffordable levels despite a significant drop in sales. According to CoreLogic figures, November saw the sixth-lowest number of home sales on record, making this year on track to be the slowest in at least 36 years.
High mortgage rates have been a major factor in limiting the number of buyers who can afford a typical house payment. However, with the number of homes for sale significantly below average, competition among buyers remained fierce, driving prices even higher.
In November, home prices in Southern California reached all-time highs in four of the region’s six counties: Orange, San Bernardino, San Diego, and Ventura. Orange County’s median home price jumped a staggering 15% in the past year to $1.1 million.
Despite the challenging market conditions, prices have continued to rise month after month, with seven out of the past 10 months seeing an increase. This is good news for home sellers, but it presents a significant challenge for younger buyers looking to enter the market.
Sales have been on a downward trend for the past 24 months, with November seeing a 4% decrease in transactions compared to the previous year. This marks the lowest sales tally for any November since records began in 1988.
The slow market has had a widespread impact on real estate professionals, with rising mortgage rates deterring both buyers and sellers. The majority of homeowners are holding onto their properties due to their low-rate loans, further exacerbating the shortage of homes for sale.
However, there may be some hope on the horizon, as a forecasted drop in mortgage rates is expected to bring more buyers into the market next year. National Association of Realtors Chief Economist Lawrence Yun predicts a 13.5% increase in U.S. home sales in 2024, driven by falling mortgage rates and rising income.
Despite the challenges faced by the Southern California housing market, there is optimism that a shift in market conditions could lead to a more balanced and sustainable real estate landscape in the year ahead.