A sluggish Southern California housing market showed signs of heating up in September, as prices rose modestly and sales jumped by the largest amount in nearly three years.
The six county region’s median price hit $533,000, a 2.5% bump from September 2018, according to CoreLogic data provided by DQNews. The number of new and resale houses and condos that sold climbed 10.4%.
The pickup follows a sustained slowdown experts blamed on the exorbitant cost of housing across the Southland. But real estate agents say falling mortgage rates have more and more people touring open houses.
The rate on a 30-year fixed mortgage has risen slightly in recent weeks but, at 3.78%, is still more than a percentage point lower than a year ago, according to Freddie Mac. The change saves $263 a month on a mortgage payment for a $533,000 house.
“Interest rates have really brought a lot of buyers out of the woodwork,” said real estate agent Joe Manjarrez with Century 21 Realty Masters. As evidence, he pointed to a recent listing of his: a three-bedroom in Whittier listed at $539,000. Fourteen offers later, it went into escrow at $560,000. He said another house similarly priced had around 30 offers.
“Everything that is around the $500,000 range ... it doesn’t last on the market,” Manjarrez said.
Real estate agent Tregg Rustad said he’s also seeing a surge in demand in the pricey Westside neighborhoods of Los Angeles, something he wouldn’t have expected a year ago when the market started to slow dramatically.
While he’s now seeing multiple offers, he said buyers simply aren’t as willing to pay something “unrelated to reality” as they were two years ago.
“They’re a little more cautious,” the Rodeo Realty agent said. “Instead of paying an arm and a leg, maybe they just pay an arm.”
The numbers from DQNews represent closed deals, meaning many buyers would have opened escrow in August and July.
The increase in sales, along with fewer new listings coming onto the market, has now pushed inventory levels below those seen last year.
The number of homes listed for sale had swelled through much of 2018 and 2019. But inventory in L.A. County in September was nearly 12% below a year ago levels, according to online real estate brokerage Redfin. And similar drops were seen elsewhere in Southern California.
If inventory continues to decline, and California’s economy continues to defy recession fears, that could put upward pressure on prices.
But whether demand continues to rise is an open question. The jump in sales in September was just the second increase seen in a year. The 10.4% increase was from September 2018, which had the lowest sales for that month in at least seven years. Setting aside that month, September 2019 still had the lowest number sales for a September since 2014.
Sales did rise in all counties compared to a year earlier. But in Orange, San Diego and Ventura, the median actually dropped, indicating affordability remains a challenge.
- In Los Angeles County, the median rose 3.9% to $618,000, while sales climbed 7.3%.
- In Orange County, the median fell 2.3% to $723,000, while sales climbed 13.1%.
- In Riverside County, the median rose 2.1% to $393,000, while sales climbed 11.5%.
- In San Bernardino County, the median rose 5.7% to $351,000, while sales climbed 6.5%.
- In San Diego County, the median fell 0.9% to $570,000, while sales climbed 14.7%.
- In Ventura County, the median fell 0.3% to $588,500, while sales climbed 15.5%.
According to the California Assn. of Realtors, sales are likely to rise further in coming months, given the number of people who’ve recently entered escrow. But the trade group cautioned that several factors still threaten to blunt growth.
“We should be mindful that economic uncertainties, supply constraints and low housing affordability could continue to hold demand back in the long run,” Leslie Appleton-Young, the Realtors chief economist said in a recent statement.