The housing pain persists in Southern California, as higher costs weigh heavily on potential buyers.
Home sales in the region fell 20.3 percent year over year in December, according to CoreLogic. That is the lowest December sales pace since 2007.
From November to December, sales of new and existing houses and condominiums in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties dropped 8.2 percent.
Sales usually rise in Southern California between November and December, with an average increase of around 12 percent, so this was clearly a huge aberration.
“Last month’s sharp drop in home sales stands out in several ways,” said Andrew LePage, a CoreLogic analyst, noting that it was the slowest pace in 11 years and the largest decline for any month in more than eight years. “This drop in activity reflects a variety of factors. Mortgage rates hit a 2018 high in November, affecting December closings, and stock-market volatility created an additional headwind in high-end markets. Meanwhile, some would-be buyers remain priced out or unwilling to buy amid concerns that prices have overshot a sustainable level.”
The median price paid for all Southern California homes sold in December was $515,000, up 1.1 percent year over year. When adjusted for inflation, the December 2018 median was still 13.2 percent below its peak in July 2007.
“The roughly 1 percent annual increase in Southern California’s median sale price last month marked the lowest such gain in the uninterrupted string of year-over-year increases each month that began in April 2012,” LePage said. “The median’s annual increases have declined over the past year as home sales slowed and inventory rose. The median’s tiny annual gain last month also reflects a shift in market mix, where higher-end sales represented a slightly lower share of all activity compared with December 2017.”
Sales of newly built homes fared particularly badly, down more than 50 percent from their average over the last 30 years. Much of that is because builders are still building far fewer homes since the housing crash, and part is because prices for newly built homes continue to soar.
“Half of America can only afford a $230,000 mortgage, and the builders in good locations just can’t get down to anywhere near that,” said John Burns, CEO of California-based John Burns Real Estate Consulting. “Eleven of the top 19 builders, their average sales price is above 400 grand.”