Southern California’s housing market slowdown pushes into 15th month

Southern California’s spring homebuying season got off to a slow start last month with high mortgage rates and too few homes for sale suppressing transactions and prices.

The median price of a Southern California home — or the price at the midpoint of all sales — was $690,000 in February, real estate data firm CoreLogic reported Wednesday, March 22.

That’s down $2,000 from a year ago and down $70,000 from last April and May when home prices went into an eight-month nose dive.

Sales, meanwhile, fell 37.6% to 11,068 transactions in the 12 months ending in February, CoreLogic reported. That’s the second-lowest tally for a February and the fourth lowest for any month in records dating back 35 years.

February typically marks the start of the spring buying season, the busiest time of year for home sales. Indeed, activity at open houses picked up in mid-January, as if someone threw a switch, several agents said.

But high interest rates and low inventory are holding the market back, housing economists said.

New listings in the region were down at least 38.5% in February, according to Zillow. Redfin numbers show total listings — both new and those taking longer to sell — were 40% below average.

“Home sellers seem to be sitting out the early spring selling season in surprising numbers,” said Zillow Senior Economist Jeff Tucker.

At the same time, monthly house payments for a median-priced home were 30% higher last month than a year earlier, even though the median home price was 0.3% lower.

As a result, homes are taking longer to sell and are going for a lot less.

Just a third of Southern California’s homes sold above the seller’s asking price, compared with two-thirds a year ago, Redfin figures show. Time on the market averaged about eight weeks vs. 3 ½ weeks last year.

“This market is not as frenzied as it was during the last two years,” Zillow’s Tucker said.

Homeowners aren’t giving up their current low mortgage rates to sell at a time when there are fewer buyers able to afford a home, market analysts said.

“Why move?” homeowners are saying, Steve Thomas of Reports On Housing said.

“There haven’t been enough homes coming on the market since the pandemic,” Thomas said. “In Southern California, we’re missing a giant piece of the marketplace.”

And yet, there are exceptions to the rule.

On Feb. 9, Seven Gables Real Estate agent Susan Saurastri closed escrow on a Huntington Beach fixer-upper that sold for $200,000 over the asking price after getting 45 offers. The stink of cigarettes was so bad, she had to set up a card table in the garage to meet visitors at a broker’s preview.

She also sold a Fountain Valley house this month at $155,000 over the asking price after getting 33 offers.

And fellow agent Tami Masek just went into contract on another Fountain Valley house after getting 32 offers.

But these sales aren’t typical, she said.

“The buyer pool has shrunk, no doubt about it,” said Saurastri, an agent for 24 years. “There are fewer people who can afford to buy.”

A mortgage rate dip in January sparked a short-lived increase in buyer interest, several agents said.

Berkshire Hathaway agent Roslynn Pomahatch said she got six offers in four days for a two-story Rancho Cucamonga house she listed in late January. But when mortgage rates started edging back up in mid-February, the market slowed down again.

“I guess everybody was waiting for interest rates to drop, and then, bam! They shot up again, and everything just completely slowed down, like somebody put the brakes on,” she said.

“I’m hoping we’re going to see a good spring,” Pomahatch said. “But as of right now, we’re not there.”

All six Southern California counties had annual sales drops of a third or more, CoreLogic figures show. Median prices had year-over-year drops everywhere but San Bernardino County, which had a 2.2% price gain.

Here’s a breakdown of prices and sales by county, with annual percentage changes:

— Los Angeles County’s median fell 4.4% to $765,000; sales were down 38.1% to 3,392 transactions.

— Orange County’s median fell 2.3% to $957,750; sales were down 31% to 1,515 transactions.

— Riverside County’s median fell 1.8% to $540,000; sales were down 38.4% to 2,336 transactions.

— San Bernardino County’s median rose 2.2% to $475,000; sales were down 43.4% to 1,479 transactions.

— San Diego County’s median fell 2.6% to $750,000; sales were down 34.6% to 1,958 transactions.

— Ventura County’s median fell 2.0% to $740,000; sales were down 41.2% to 388 transactions.