Southern California home prices hit more records as rate hikes fail to slow bidding wars – Press Enterprise

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The Southern California housing market remains overheated, with home prices hitting historic highs despite soaring inflation and rising mortgage rates.

With price and mortgage increases pushing many potential buyers away, sales plummet. Yet buyer demand continues to outstrip the supply of homes for sale.

“There’s so little supply and so much demand, we always exceed the asking price no matter where,” said Tami Fleming, an agent for Westcoe Realtors Inc. in Riverside. “(I had) three houses in a row sold for over $100,000 above list price.”

The median price of a Southern California home — or the price in the middle of all sales — hit a record $760,000 in April, up $109,000, or 16.7%, from the previous year, according to CoreLogic figures released Wednesday, May 18 by data firm DQNews. This equates to a price increase of nearly $2,100 per week over the past year.

Records were set in all six Southern California counties in the DQNews/CoreLogic housing report, with median home prices ranging from $519,000 in San Bernardino County to $1.05 million in Orange County.

April marked the 13th time in the past 15 months that the region’s median hit a record high. It was the 21st consecutive month of annual price increases of 10% or more, compared to a long-term average of 5.5%.

“It was a wild ride,” said Matt Cortez, owner of Good Harbor Real Estate in Huntington Beach. “In my view, home prices should only rise 3-4% per year, or just a little above inflation. We know that (this rate) of home prices is unsustainable. …Buyers of a first home won’t be able to compete with all those cash offers.

Meanwhile, sales in the region fell 18.9% to 21,486 transactions last month, according to figures from DQNews/CoreLogic. This is the largest year-over-year drop in sales since the pandemic panic of May 2020, nearly two years earlier.

The drop in sales reflects affordability issues caused by the combined impact of rising prices and higher mortgage rates, Jordan Levine, chief economist for the California Association of Realtors, said in a news release Tuesday.

For example, the typical April home payment increased by $1,047 per month, or 47%, for a Southern California median price home, according to figures from Freddie Mac.

The market “is moderating … as higher mortgage interest rates and soaring house prices begin to negatively impact housing demand,” Levine said.

As sales slowed, the number of homes on the market rose slightly after falling steadily over the past few years, according to figures from Zillow. Southern California had nearly 31,000 homes for sale in April, up from March but still 26% below year-ago levels.

“Inventory is rising on the back of overpriced properties — dogs that aren’t as expensive as dogs, or homes with lower locations that were in demand last year,” said Steve Thomas, author of Reports on Housing.

Thomas and others say all of this change is translating into a market that is moving toward a better balance between buyers and sellers, but not a real estate crash.

“The sky is not falling,” Thomas said.

Despite rising rates, demand remains robust, said Selma Hepp, deputy chief economist at CoreLogic. In some cases, rising rates have somewhat accelerated demand as buyers rush to lock in rates before they rise even higher. Sales aren’t as down as they appear, she said. In April 2021, when rates were near an all-time low, sales boomed, reaching the 11th highest level on record for that month.

“That’s why we’re seeing a decline in sales year over year,” Hepp said. “The strong price growth continues to reflect the imbalance between demand and supply, although some of the demand has been reduced due to higher tariffs.”

The slowdown is less apparent in the Inland Empire, where annual sales declines of 14-15% were the smallest in the region.

Fleming, Riverside’s agent, speculated that some Inland Empire buyers “have a lot of money in their pocket because they sold their house in Los Angeles or Orange County, and now they buy here”. Fleming said it’s common to see 15 to 20 offers on a home, with an agent in his office recently in his 50s.

“I feel bad for the buyers. For every offer you accept, you have 15 to 20 rejected,” Fleming said. “I hate to tell the other agent that their buyers didn’t get the house. In fact, it breaks my heart.

Here’s a breakdown by county of median home prices and total sales, with percentage changes from last year:

  • The Los Angeles County median rose 15.3% to $865,000; sales are down 17.1% to 6,999 transactions.
  • Orange County median rose 20.6% to $1,050,000; sales are down 27.8% to 3,021 transactions.
  • Riverside County’s median rose 20.4% to $590,000; sales are down 15.1% to 4,027 transactions.
  • The San Bernardino County median rose 19.9% ​​to $519,000; sales are down 13.7% to 2,874 transactions.
  • The San Diego County median rose 20.0% to $840,250; sales are down 21.7% to 3,598 transactions.
  • Ventura County’s median rose 15.4% to $815,000; sales are down 20.0% to 967 transactions.
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