High mortgage rates continued to contort the Southern California housing market in October, resulting in rising prices even as home sales fell to near record lows.
Home prices saw their biggest percentage gain in a year, pushing the median home price — or price at the midpoint of all sales — up 4.3% to $735,000 in October, according to CoreLogic.
That higher median, combined with the highest mortgage rates since the start of this century, boosted monthly house payments for a typical Southern California home to a record $4,160.
In Orange County, the median home price soared to $1.085 million, up 14% in a year to an all-time high.
Meanwhile, home sales for the six-county region fell 8% from the year before to 13,293 transactions, according to CoreLogic data.
Sales have fallen on an annual basis for 23 straight months, dropping to the second-lowest level for an October since 1988. October’s tally was also the 20th lowest of all months on record.
“A sizable jump in interest rates kept home sales constrained in October and will likely hamper home sales for the remainder of the year,” Jennifer Branchini, the California Association of Realtors’ 2023 president, said in a statement.
Southern California’s trend mirrors what’s happening in the nation as a whole, with markets plagued by low inventory, high mortgage rates and rising prices. A recent LendingTree poll shows just over a third of Americans are rooting for a housing market crash to boost their chances of affording a home. Nearly half of millennials and just over half of Gen Z poll respondents are hoping for a crash.
Lower sales are due to both fewer homes on the market and fewer buyers able to afford today’s lofty payments. Nonetheless, the number of buyers still outpaces for-sale listings as homeowners opt to hang onto historically low mortgage rates obtained prior to 2022.
“Housing is scraping the bottom in the number of homes available, buyer demand and the number of homeowners willing to sell,” Reports on Housing author Steve Thomas said in his latest report.
Pat Veling, president of consulting firm Real Data Strategies, said the slow transaction volume continues to hammer the real estate industry, leaving brokers and others dependent on transaction volume “in a tenuous place.”
“Consolidation is on the horizon,” Veling said. “We’ll have fewer agents, we’ll have fewer companies, we’ll have fewer (local Realtor) associations and multiple listing services.”
But Veling and others predicted a slight rebound in the market in 2024 if interest rates decrease as expected.
“If inflation continues to cool, we could see more improvement in mortgage rates, … which would alleviate some pressure on both the buy and sell sides of the housing market in 2024,” said California Association of Realtors Chief Economist Jordan Levine.
Here’s a county-by-county breakdown of home prices and sales, with year-over-year percentage changes:
— Los Angeles County’s median rose 3.9% to $832,000; sales were down 8.6% to 4,234 transactions.
— Orange County’s median rose 14.2% to a record $1.085 million; sales were down 8.4% to 1,904 transactions.
— Riverside County’s median rose 1.5% to $553,000; sales were down 5.7% to 2,526 transactions.
— San Bernardino County’s median rose 1.4% to $497,000; sales were down 6.4% to 1,965 transactions.
— San Diego County’s median rose 6.5% to $825,000; sales were down 7.7% to 2,161 transactions.
— Ventura County’s median rose 7.4% to $816,000; sales were down 19% to 503 transactions.
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