The budget-busting mix of rising mortgage rates and record-high prices squashed Southern California homebuying in March.
The six-county region had 14,176 completed sales in March of existing and new houses, townhomes, and condos, according to data released by CoreLogic on Monday, April 29. This was the second-slowest March in Southern California since 1988. Only March 2008, amid a global financial collapse, had fewer sales. This March’s buying pace also ran 39% below average.
Lethargic homebuying, however, didn’t stop the six-county region’s median sales price from reaching a new peak. Prices rose 1.8% in March – and 8% in a year – to a record-high $753,000, besting the old April 2022 record by $3,000.
All-time high prices also were set in Orange, Riverside, and San Diego counties.
What was almost as stunning was the meek sales momentum of March, a month that typically sees a huge bump in homebuying as the slow winter period morphs into a spring surge. Yes, the region’s March sales were up 14% from February, but that increase was the smallest jump in 37 years of Southern California records. It also was far below the average 36% February-to-March sales gain.
The year had started with industry hopes there would be a significant homebuying reversal from the previous two years, which were the slowest for Southern California home sales in a database that dates back 36 years.
But affordability crumbled from already low levels due to pricier financing and stubbornly high prices. That combination pushed many potential buyers out of the market.
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The increased mortgage rates were an unexpected uptick for many analysts, many of whom predicted rates would be declining by now. Rates as measured by a 30-year loan benchmark from Freddie Mac averaged 6.82% in March, up from 6.64% in January and 6.54% a year ago.
Homebuilders had slow sales, too. March saw 1,186 new homes purchased across Southern California – flat in a year. New home sales were just 8.4% of all March sales, the smallest share for local builders since last August.
Payment pain
Those lofty prices and rates translated to a typical $3,935 monthly house payment — the fifth-highest on record — for a March buyer in Southern California, assuming buying the median-priced home with a 20% downpayment. That’s an 11% jump in a year, a steep expense when one measure of local wages – the Employment Cost Index – rose just 5% last year.
Another homebuying challenge was that the few Southern California house hunters who could afford to buy were forced to battle over limited options. These same affordability challenges kept many owners from placing homes on the market because they feared they could not afford a new residence.
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March had a total of 21,100 Southern California residences listed for sale, according to Realtor.com. That’s up only 9% in a year and far less than what was seen in pre-pandemic day. March 2019, for example, had 42,700 homes on the market.
That same listings data offered a big hint as to why sluggish homebuying won’t pick up soon. Southern California had 15,200 pending sales in March – that’s residences with a signed purchase contract – up only 3% in a year.
Plus, financing got costlier. Mortgage rates have averaged 7% in April.
Geographically speaking
Here’s a peek at March homebuying by county, ranked by sales …
Los Angeles: 4,517 sales, up 21% in the month but still the second-slowest March over 37 years. The median rose 6% in a year to $850,000 (third-highest price). This equals a $4,442 monthly payment, up 9% in the year to No. 5 highest.
Riverside: 2,986 sales, up 16% in the month – No. 10 slowest March. Median rose 8% in a year to a record $577,000. Equals a $3,015 payment, up 11% in the year to No. 4 highest.
San Diego: 2,306 sales, up 8% in the month – No. 2 slowest March. Median rose 9% in a year to record $865,000. Equals $4,521 payment, up 13% in the year to No. 4 highest.
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Orange: 2,066 sales, up 16% in the month – No. 2 slowest March. The median rose 17% in a year to a record $1.15 million. Equals a $6,010 payment, up 21% in the year to No. 2 highest.
San Bernardino: 1,788 sales, up 1% in the month – No. 2 slowest March. Median rose 4% in a year to $500,000 (No. 2 price). Equals a $2,613 payment, up 7% in the year to No. 5 highest.
Ventura: 513 sales, up 18% in the month – slowest March. The median rose 6% in a year to $825,000 (No. 2 price). Equals a $4,312 payment, up 10% in the year to No. 5 highest.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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