Southern California home sales, prices rose in July despite high unemployment
Southern California home sales and prices jumped in July as households brushed off economic uncertainty and rushed to take advantage of rock-bottom mortgage rates.
Across the six-county region, sales of new and previously owned houses, townhouses and condos rose 27.7% from June and managed an increase of 2.5% from the pre-pandemic days of July 2019, according to data released Thursday by DQNews.
The Southland’s median sales price — the point at which half the homes sold for more and half for less — climbed by the most since 2018, rising 8.5% from a year earlier to a new record of $585,000.
The July numbers are the latest evidence of a housing market rebound from spring, when stay-at-home orders and fear over the coronavirus put a freeze on buying.
This week, the National Assn. of Home Builders reported that its monthly gauge of home builder confidence tied a record high, while the Census Bureau released data showing builders are increasingly breaking ground on new homes.
The average interest rate on a 30-year fixed mortgage stood at 2.99% this week, near a record low, according to Freddie Mac.
The economic downturn has so far disproportionately hit low-wage sectors such as retail and hospitality where fewer people tend to have the money to purchase a home in the first place. Many well-paid white-collar workers are working from home and might want out of a cramped apartment, especially when the average rate for a 30-year fixed mortgage is just under 3%.
“You see a lot of first-time home buyers in the market,” said Jeff Anderson, chief executive of Anderson Real Estate Group in Long Beach.
Sales increased across the Southland in July from June and were up in many locations year over year even though inventory is below 2019 levels.
- In Los Angeles County, sales rose 34.6% from June, but were down 2.3% from a year earlier. The median home price rose 5.5% from a year earlier to $670,000.
- In Orange County, sales rose 38.7% from June and 6.7% from a year earlier. The median home price rose 6.3% from a year earlier to $775,000.
- In Riverside County, sales rose 21.8% from June, but were down 0.4% from a year earlier. The median home price rose 9.1% from a year earlier to $430,000.
- In San Bernardino County, sales rose 22.3% from June and 8.1% from a year earlier. The median home price rose 9.8% from a year earlier to $375,000.
- In San Diego County, sales rose 19.6% from June and 6.6% from a year earlier. The median home price rose 9.3% from a year earlier to $634,000.
- In Ventura County, sales rose 27.5% from June and 2.6% from a year earlier. The median home price rose 6.7% from a year earlier to $635,000.
The data from DQNews represent closed sales, meaning most buyers probably went into escrow in May and June as the economy reopened.
It’s unclear how much of the increase in sales can be attributed to new demand versus sales that might have happened anyway absent strict stay-at-home orders that all but shut down the typically busy spring buying season.
If the economy takes a further beating, the real estate market could as well.
Anderson, the Long Beach real estate agent, said he’s starting to see the market go in different directions, with rising inventory and falling prices in the downtown Long Beach condo market, as well as expensive neighborhoods by the beach in the eastern part of the city.
More suburban neighborhoods priced in the $600,000 to $700,000 range are white hot, he said, in part because more people from Los Angeles are looking to those neighborhoods because houses are relatively cheaper and, for now, they don’t have to be near their work on the Westside or in downtown Los Angeles.
“Buyers are writing offers with very few contingencies, just trying to claw their way into escrow,” he said.
Richard Green, director of the USC Lusk Center for Real Estate, wonders how long the current upswing can continue because, with the economy the way it is, “we are going to run out of people who still have jobs who can buy houses.”
For now, Heather Presha, a real estate agent who specializes in South Los Angeles, said she’s brought two additional agents onto her team to help with the crush of demand from would-be buyers.
A lot of interested buyers are looking now because they think they’ll find deals, she said, but inventory is low and they’ve instead discovered bidding wars.
According to Redfin, the number of homes for sale in Los Angeles County last month was down 17% from a year earlier, something agents attribute in part to sellers who pulled their listings from the market in spring as they waited to see how the pandemic would progress.
Presha said she’s now getting more inquiries from homeowners wondering if they should cash out now, fearful the market will tank and they’ll lose their sizable equity.
One of those owners, she said, is expecting to get laid off from his job in the film industry.
“He wants to liquidate and move to the mountains,” Presha said.