Southern California Sees Record High Home Prices in March, But Decline in Sales Volume

In March of this year, the constantly rising mortgage rates coupled with record-high housing prices have dampened real estate activities in Southern California.

According to data released by CoreLogic on Monday, in March, the total sales of existing and new homes (including single-family homes, townhouses, and apartments) in the six counties of Southern California (Los Angeles County, Orange County, San Bernardino County, Riverside County, San Diego County, and Ventura County) amounted to 14,176 units, marking an 8% decline compared to the same period last year.

This March witnessed the second lowest home sales volume in Southern California since 1988, just behind March 2008.

However, the sluggish home buying sentiment did not halt the upward trajectory of housing prices in Southern California. In March, housing prices in the region increased by 8% year-on-year, reaching a historical high of $753,000, surpassing the previous record set in April 2022 by $3,000. Additionally, Orange County, Riverside County, and San Diego County also set new price records.

Equally surprising was the subdued sales momentum in March, as the Southern California housing market typically experiences a surge in home sales during this month. While sales in March increased by 14% compared to February, it fell far short of the average sales increase of 36% from February to March in previous years.

At the beginning of this year, the industry had hoped for a significant turnaround in home buying, as the past two years had been the slowest for home sales in Southern California. However, due to the rising cost of loans and housing prices remaining high, the affordability for Southern Californian residents has further decreased from an already low level, leading many potential buyers to exit the market.

Based on Freddie Mac’s 30-year loan benchmark, the average rate in March was 6.82%, higher than the 6.54% from a year ago.

For home buyers in Southern California, purchasing a median-priced home in March with a 20% down payment under the current mortgage rates would mean a monthly payment of $3,935, which is the fifth highest on record, marking an 11% increase from a year ago. Meanwhile, a key measure of local wages, the employment cost index, only rose by 5%.

Another challenge faced by buyers is that the few in Southern California who can afford to purchase a home are forced to compete within limited options. Many homeowners are hesitant to put their homes on the market for fear of not being able to afford a new residence after selling.

According to data from Realtor.com, in March, there were a total of 21,100 homes listed for sale in the Southern California market, significantly lower than pre-pandemic levels. For example, in March 2019, there were 42,700 homes listed for sale.

In Los Angeles County, a total of 4,517 homes were sold in March, representing a 21% increase from the previous month, but still the second lowest sales volume for that month in 37 years. The median home price saw a 6% increase within a year, reaching $850,000. Purchasing a home with a loan at the current rates translates to a monthly payment of $4,442, a 9% increase from a year ago.

Riverside County saw the sale of 2,986 homes, a 16% increase from the previous month. The median home price increased by 8% within a year, reaching a historic high of $577,000. This corresponds to a monthly payment of $3,015, an 11% increase from a year ago.

In San Diego County, a total of 2,306 homes were sold in March, an 8% increase from the previous month. The median home price grew by 9% within a year, reaching a record high of $865,000. This equates to a monthly payment of $4,521, a 13% increase from a year ago.

Orange County witnessed the sale of 2,066 homes, marking a 16% increase from the previous month. The median home price rose by 17% within a year, reaching a record high of $1.15 million. This translates to a monthly payment of $6,010, an 11% increase from a year ago.

San Bernardino County saw the sale of 1,788 homes, a 1% increase from the previous month. The median home price increased by 4% within a year, reaching $500,000. This corresponds to a monthly payment of $2,613, a 7% increase from a year ago.

In Ventura County, a total of 513 homes were sold in March, an 18% increase from the previous month. The median home price grew by 6% within a year, reaching a historic high of $825,000. This means a monthly payment of $4,312, a 10% increase from a year ago.

According to data released by the California Association of Realtors (CAR), in the first three months of this year, single-family home sales in California increased by only 0.7% compared to the first quarter of 2023.

In March, the median home price in California saw a robust year-over-year increase, climbing from $793,260 in March 2023 to $854,490 in March 2024, a 7.7% rise.

In recent months, sales of homes priced over $1 million in California have consistently outperformed those priced under $500,000. In March, the former saw a 9.9% year-on-year sales increase, while the latter experienced a 2.4% decline in sales.