Southern California’s housing market revived a bit in October, with prices at a near-record high and sales recovering from September’s dismal drop.
A dip in interest rates the month before – when most October sales contracts were signed – may have lured more buyers into the market.
However, October’s sales tally was still one of the lowest of the past four decades.
The median price of a Southern California home – or the price at the midpoint of all sales – rose 5% to $775,000 during the 12 months ending in October, real estate data firm CoreLogic reported Wednesday, Dec. 4.
October’s median home price was tied for second-highest on record, coming within $5,000 of the record high of $780,000 reached in July.
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Prices have risen from one month to the next in 16 of the past 23 months, a sign that buyers still outnumber listings despite an increase in homes for sale.
October prices were up in all six counties in the region, with San Bernardino’s median hitting a record high of $525,000, CoreLogic figures show.
Sales, meanwhile, also increased in October, rising 10% to 14,662 transactions.
That’s the fourth-lowest tally for any October since 1988, and it’s well below the October average of just over 22,000 transactions.
Year to date, 2024 generated just under 146,000 home sales in the six-county region, compared with a January-to-October average of 223,000 sales.
Still, there were 2,000 more deals in October than in September, a 17% jump. Typically, sales are either down or unchanged from September to October.
Housing economists noted that sales appear to pick up even more in November, with the elections completed and a second Federal Reserve cut in interest rates. Both Redfin and the National Association of Realtors reported an increase in the number of new purchase contracts signed in October and early November.
“Homebuying momentum is building after nearly two years of suppressed home sales,” NAR Chief Economist Lawrence Yun said last week in a statement. “Even with mortgage rates modestly rising, … continuous job additions and more housing inventory are bringing more consumers to the market.”
Another indicator of higher demand: Mortgage Bankers Association figures show that mortgage purchase applications rose to the highest level since the start of the year, Bloomberg reported.
Although the number of homes for sale remains below average, Southern California listings jumped 47% since the start of the year, according to the brokerage Redfin. The region had just over 54,000 homes for sale in October.
“Higher inventory levels … are giving prospective buyers more options compared to earlier in the year,” Bloomberg quoted MBA economist Joel Kan as saying.
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Lower interest rates also make homebuying more attractive.
Interest rates fell to a two-year low in September, when October’s deals went under contract, according to Freddie Mac surveys.
Still, home prices remain shockingly high.
The average buyer paid $844,000 for a Southern California house – and almost $1 million in Los Angeles and San Diego counties. At least half of the houses sold for more than $1.28 million in Orange County.
The median price for a condo – once considered the affordable alternative for entry-level buyers – hit $682,500 in the region as a whole, and ranged between $700,000 to almost $800,000 in L.A., San Diego and Orange counties.
Over the past five years, prices soared most dramatically in Orange and San Diego counties, rising 45% and 35% respectively. That compares with a regionwide average of 28%.
Housing economists predict U.S. home prices will keep rising in the new year, despite persistently high mortgage rates.
Realtor.com released a forecast saying mortgage rates will average 6.3% in 2025, compared with an average of 6.7% this year so far. Home prices will grow an additional 3.7% through next year, after rising 4% this year.
Redfin economists concur with the 4% home price prediction, but believe mortgage rates will be slightly higher, averaging just under 7%. Redfin economists expect home sales to rise in 2025, largely due to pent-up demand. But high prices and high rates still will leave some shoppers priced out of homeownership.
“Many Americans will remain renters,” the Redfin forecast said.
Here’s a county-by-county breakdown of Southern California prices and sales, with annual percentage changes:
– Los Angeles County’s median rose 5% to $875,000; sales were up 15.3% to 4,899 transactions.
– Orange County’s median rose 6% to $1.15 million; sales were up 4.7% to 1,994 transactions.
– Riverside County’s median rose 5.4% to $585,000; sales were up 11% to 2,808 transactions.
– San Bernardino County’s median rose 6.1% to $525,000; sales were down 1.6% to 1,945 transactions.
– San Diego County’s median rose 7% to $879,000; sales were up 9.6% to 2,372 transactions.
– Ventura County’s median rose 0.7% to $830,000; sales were up 32% to 644 transactions.