Rising mortgage rates and economic uncertainty contributed to an already slowing housing market in December, causing Southern California home sales to tumble 20.3 percent from a year ago, new data show.
That’s the biggest year-over-year sales drop in eight years, real estate data firm CoreLogic reported Wednesday, Jan. 30.
With one-fifth fewer homes changing hands, December home prices barely budged, increasing by the smallest margin since the housing recovery began in 2012.
“It’s too soon to tell, but December was a bit of a yellow flag that maybe housing is slowing down,” said Ralph McLaughlin, CoreLogic’s deputy chief economist.
Area agents and home sellers say they noted a shift in market psychology as early as last summer, following 3 ½ years of a red-hot seller’s market.
Now, agents see increased listings, rampant price reductions and say homes are taking longer to sell.
“It gets frustrating for (home sellers). It’s like you’re having a party and no one shows up,” said Noel Palmieri, a Century 21 agent based in the San Gabriel Valley. “We’re not getting the showings like we were. Things aren’t flying off the shelf the way they were.”
In all, Southern California homeowners sold 15,781 houses, townhomes and condos last month, about a third fewer than the December average of 23,445 homes, CoreLogic figures show.
The sales drop reflects a variety of factors, said Andrew LePage, CoreLogic’s analyst.
“Mortgage rates hit a 2018 high in November, affecting December closings, and stock-market volatility created an additional headwind in high-end markets,” he said. “Meanwhile, some would-be buyers remain priced out or unwilling to buy amid concerns that prices have overshot a sustainable level.”
The median price of a Southern California home – or the price at the midpoint of all sales – was $515,000, just $5,500 higher than the year before.
It was the smallest year-over-year price gain since March 2012, reflecting in part a shift to fewer high-end homes selling, LePage said.
Zillow reported days on the market for Los Angeles, Orange, Riverside and San Bernardino counties stretched to an average of 78 days in December, up from 72 a year earlier. Zillow reported listing inventory up 23 percent in the year ending in December.
Buyers can afford to be more finicky now that the seller’s market appears to be over, said Charlotte Davis, an agent with Move Home Realty in Murrieta. But more wannabe buyers today are failing to qualify and fail to get prequalification letters from lenders — a must for prospective buyers until last year.
“The buyers were coming prepared (last year),” said Davis. “Now we have buyers who are coming who are not prepared. They’re kind of dreaming, but they don’t have everything in order.”
Agents say they are warning their clients not to expect buyers showing up in droves as in the past.
It took 80 days before Century 21 agent Palmieri got an offer for one house she was selling in the city of San Gabriel. It finally sold for $130,000 below its original list price 3 ½ months after it went on the market.
In April, Palmieri sold a condo in Monrovia for $620,000, or $35,000 above its $585,000 asking price. By August, she had trouble selling a similar unit in the same complex for $575,000.
“It was tough,” she said.
CoreLogic has forecast that home prices will stay in positive territory this year. But McLaughlin said he’s waiting to see how the market fares in the first three months before predicting the slowdown will continue through the spring, the peak selling season for housing.
Steve Thomas, author of Orange County-based Reports On Housing, was more pessimistic.
“It’s not going to be the robust spring market everybody was accustomed to from 2012 to 2018,” he said.
Home price gains were well below average throughout the six-county region included in CoreLogic’s December report, ranging from a 1.6 percent increase in Orange County to a 4.1 percent gain in Riverside County. Gains averaged from 6.1 percent to 7.3 percent during the previous 11 months. Here’s a breakdown of median prices and sales numbers by county for December:
- Los Angeles: Median price: $581,500, up 2 percent; sales: 5,291, down 20 percent.
- Orange: Median price: $708,500, up 1.6 percent; sales: 2,260, down 26 percent.
- Riverside: Median price: $380,000, up 4.1 percent; sales: 2,938, down 14.6 percent.
- San Bernardino: Median price: $329,750, up 2.1 percent; sales: 1,992, down 21.5 percent.
- San Diego: Median price: $550,000, up 1.9 percent; sales: 2,642, down 22.2 percent.
- Ventura: Median price: $575,000, up 2.1 percent; sales: 658, down 13.5 percent.
Originally published here.