Southern California home prices hit a new record. Is a slowdown on the horizon?
Southern California home prices soared in May, hitting another all-time high, though some data are starting to point to a potential slowdown in demand.
The six-county region’s median sales price rose a whopping 24.7% from May 2020 to a record $667,000 last month, according to data released Tuesday by data firm DQNews.
Sales also surged from a year earlier.
The big leap in numbers from a year earlier is partly due to a once-in-a-lifetime comparison.
The data reflect closed sales, meaning the 2020 data covered mostly deals that opened escrow during March and April 2020 — the height of the coronavirus lockdowns. At the time, sales had plunged and price growth slowed.
As those lockdowns eased, the housing market roared back to life both locally and nationally, spurred by record low mortgage rates and a desire for more space during the pandemic. The number of investor sales is also on the rise, as deep-pocketed individuals and companies look to acquire single-family houses to rent out or renovate.
Median home prices in the region have risen by double digits for 10 consecutive months and new records are being set both regionally and locally.
- In Los Angeles County, the median home price rose 25% to a record $775,000 in May, while sales climbed 117%.
- In Orange County, the median home price rose 19.3% to a record $895,000, while sales climbed 113.4%.
- In Riverside County, the median home price rose 22.5% to a record $502,250, while sales climbed 81.7%.
- In San Bernardino County, the median home price rose 16.8% to $432,000, while sales climbed 61%.
- In San Diego County, the median home price rose 22.9% to a record $725,000, while sales climbed 81.7%.
- In Ventura County, the median home price rose 20.9% to a record $701,500, while sales climbed 128.7%.
It’s unclear how long such rapid increases will continue, and many buyers worry they are being priced out of the market.
Selma Hepp, deputy chief economist with CoreLogic, said she expects home-price appreciation to slow from today’s torrid levels, though she doesn’t see price declines on the horizon.
Some data are pointing in the direction of a potential slowdown. An index of national home-buyer demand from real estate brokerage Redfin has fallen 14% from a peak in April. The index factors in requests for home tours and other services the company provides.
The number of home sales entering escrow is also falling nationally and in L.A. County, but those rates are still above the comparable time period in 2019 and 2018, in addition to 2020, according to Redfin.
Taylor Marr, lead economist with Redfin, said the apparent slowdown is slight and might mean buyers will just have an easier time getting their offers accepted without having to waive contingencies, which allow buyers to back out of a deal without penalties if an appraisal doesn’t come through or an inspection turns up a problem.
“It appears that a healthier market may finally be on the horizon even if it doesn’t come with a discount,” Marr said.