Southern California’s home prices boomeranged in April from a rare price drop in March as lower mortgage rates and an increase in the number of homes for sale lured more home shoppers back into the market.
Real estate data tracker CoreLogic’s monthly housing market report shows home values rose slightly last month. And while sales were down, they decreased by the smallest margin in nine months.
“The buyers feel more motivated to get back in the market. There’s some incentives with rates being down,” said Jessica Nieto, a broker with Brooke Realty who sells homes in Los Angeles County. “I would say (the market) feels better (than a year ago). I don’t anticipate it slowing down as quickly as last summer.”
The median price of a Southern California home, or price at the midpoint of all sales, was $527,500, up 1.4% from April 2018 levels.
By comparison, the median dipped 0.8% in March — the first year-over-year price drop since 2012. Economists warned at the time not to read too much into that number, saying the March decrease was due to a statistical blip rather than a drop in home values.
CoreLogic also reported a sales tally of 20,074 houses, condos and townhomes last month. While that’s down 3.3% from April of last year, sales drops averaged 10% during the previous 12 months. April sales also were up almost 12% from March levels, compared with an average March-to-April gain of 2.2%, CoreLogic reported.
The April numbers represent deals signed in February and March, the start of the busy spring homebuying season, which this year was blessed by a drop in mortgage rates to a springtime average of 4.2% for the 30-year fixed.
Nonetheless, a cooling trend that took root last year continues to hold the market in its grip, with less demand, swelling inventory and buyers taking their time, agents and market watchers reported.
For perspective, last month’s sales tally was 3% below the April average for the past eight years and 15% below the April average for the past 31 years, CoreLogic figures show. Sales have been down year over year for 17 of the past 22 months.
Additionally, this year’s mortgage-rate drop failed to spark as much interest as experts expected, perhaps due to volatile stock prices and news about a trade war and looming recession, said Steve Thomas of Reports on Housing.
“We still have muted demand compared to a year ago,” he said. “When you watch the Dow (Jones Industrial Average) get hammered again and again and again, and there’s talk of a recession and inverted yield curves, that has an effect.”
Mortgage rates aren’t the only factor affecting homebuying, added Zillow Senior Economist Sarah Mikhitarian.
“The biggest hurdle for most buyers is affording the down payment,” Mikhitarian said in an email. “Homes values in Southern California have grown precipitously throughout the recovery and have far outpaced incomes over the past several years, making the down payment on the typical home in the area out of reach for many.”
A recent analysis of data compiled by The Associated Press showed Southern California home prices increased at least four times faster than incomes over the past seven years. CoreLogic figures show median home prices have doubled since 2012 in Los Angeles, Riverside and San Bernardino counties, with 75% gains in Orange County and an 82% gain in the region as a whole.
With fewer transactions, Southern California listings jumped 22 percent in April from a year earlier, Thomas’ figures show. Inventory is at its highest level since 2011 in Los Angeles, Orange and San Bernardino counties, Thomas said, while Riverside County inventory is at a three-year high.
With so many homes to choose from, some listings are taking longer to sell, said Greg Goss, an agent with Coldwell Banker Residential Brokerage in Arcadia.
For example, Goss listed a four-bedroom Rancho Cucamonga house with a pool and a view of Mount Baldy in February for $550,000, expecting multiple buyers to bid up the price. It took a month to go into escrow, finally selling in April — for $550,000.
“There are still buyers out there, but they’re being more selective. If your home’s not priced right, it will sit on the market,” Goss said. “I would say everything’s slowing down from a year ago. It’s not as brisk as it was.”
Whereas bidding wars were common from 2015-17, they’re no longer the rule today, Goss said. While buyers used to submit “love letters,” telling sellers how much they adored a home, “we’re not seeing that as much now,” he said.
“We’re not seeing the frenzy we used to see, where people were being overly exuberant,” he said. “We’re seeing offers now that are below the asking price, whereas before, we were seeing offers above asking. Instead of being a seller’s market, it’s much more of a balanced market at this point.”
Trends were similar throughout Southern California, with slight price gains in four of the region’s six counties and sales drops across the board. A county-by-county breakdown shows:
- Los Angeles County’s median price rose 3% to $607,750 last month, while sales were down 0.9% to 6,438 homes.
- Orange County’s median increased 2.8% to $735,000, following year-over-year price dips in February and March. Orange County had the region’s biggest sales drop, falling 8% to 2,967 transactions.
- Riverside County’s median increased 3.6% to $390,000, while sales were down 3.3% to 3,681 transactions.
- San Bernardino County’s median increased 1.5%, with sales down 4.7% to 2,540 transactions.
- San Diego County’s median was unchanged from April 2018’s $570,000, while sales decreased 3.4% to 3,593.
- Ventura County’s median also was flat, matching the year-ago median of $585,000. Sales there decreased 0.2% to 855 transactions.
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