Southern California’s housing boom stormed into June with home prices setting a fifth-straight record and sales soaring to the highest level in almost 15 years.
The median price of a Southern California home — or price at the midpoint of all sales — hit $680,000, up 22.5% in a year, DQ News/CoreLogic reported Tuesday, July 20. By comparison, annual price gains averaged 9.5% over the past nine years.
In dollar terms, the median jumped $125,000 during the 12 months ending in June, the second-biggest one-year gain in records dating back to 1989. The only other month with a bigger year-over-year gain was May, when the median jumped $131,500.
Record prices also were set in all six counties in the region. In Orange County, the median price for all homes hit $900,000, while the median for an existing house topped $1 million for a second straight month. The median price for condos hit record highs in both L.A. and Orange counties, rising to $635,000 and $627,000 respectively.
“It’s crazy. It’s the craziest I’ve ever seen it,” said Suzanne Seini, co-owner of Irvine-based Active Realty. “It’s tough for (buyers). I think they get disheartened.”
Sales last month totaled 27,012, the most for any month since August 2006. That averages more than 1,200 home sales a day.
June’s total was up 52% from a year ago, when sales were depressed by pandemic lockdowns and the banning of open houses, which only just resumed last month. More significantly, however, June’s sales tally was up 12.3% from the previous month.
Some of the lowest mortgage rates in history, coupled with more buyers entering their homebuying years and demand for more space during the pandemic have been the key reasons cited for rising demand among buyers, experts have been saying.
While some agents say things may have cooled slightly in July, sellers still hold all the cards in today’s market.
Agents interviewed estimated 70-95% of the homes are getting multiple offers. Buyers still are bidding over the asking price and making concessions like waiving their right to kill the deal if the lender’s appraisal comes in too low.
“In my 33 years, I have never experienced what I experienced from the middle of last year through spring of this year,” said Stephanie Vitacco, an agent with Keller Williams Encino-Sherman Oaks. “It was truly unprecedented. But then, again, we’ve never been through a global pandemic either.”
Arash Yazdanian is one example of how brutal the housing market has been for buyers.
In early 2020, Yazdanian, 44, and his wife sold their Aliso Viejo home to improve their chances of getting their offer accepted on a home with a bigger backyard for their kids to play in. He figured it would take two to three months to find a replacement house. It ended up taking well over a year.
The Yazdanians looked at close to 100 houses and got outbid by cash buyers on four.
“Financing a home seems like an odd thing to do these days,” Yazdanian said. “You put in an offer, and they say, ‘we have better offers for all cash.’ ”
The couple had all but given up. Then a five-bedroom house in Laguna Hills with a large yard and a pool caught their eye. This time, their agent advised them to bid at least $50,000 over the asking price — and more than $200,000 over their original budget — and to drop the appraisal contingency. They agreed to an escrow of just 22 days.
Their deal closed on July 8, and they’re now getting ready to move in.
“We’re excited it’s over,” said Yazdanian, a vice president for a mortgage company. “We don’t have to look anymore.”
June’s numbers reflect deals originally signed in April and May.
But Seini and Vitacco both said they’re seeing a shift in the market in recent weeks, with buyers now more hesitant to go well over the asking price.
Some are saying, “I’m out. I’m just going to keep on renting,” Seini said. “Things aren’t affordable.”
Fear of overpaying and the normal summertime distractions of vacations and weddings resulted in fewer showings and less intense bidding wars, Vitacco said. Last winter, homes were getting 100 showings in 10 days and 20 to 30 offers, she said. Now, there are perhaps five to seven showings in that time and one to three offers.
“It’s like someone took their foot off the pedal,” Vitacco said. “It’s not as chaotic as it was earlier in the year.”
Buyers also are being more cautious, with some saying they don’t want to buy at the top of the market.
“I’m not seeing $100-K offers over the asking price,” Seini said. “And people are being more realistic about where the appraisal is going to come in.”
But the market remains challenges as listings remain tight.
Zillow reported that while listings were up 0.6% from May in Los Angeles and Orange counties and up 3.8% from May in the Inland Empire, they’re down 9% from a year ago in L.A.-Orange County and down 30% in the Inland Empire.
How much longer will prices continue to rise?
Mortgage giant Freddie Mac issued a quarterly forecast last week predicting prices will continue rising through next year, but at a much slower pace as mortgage rates gradually increase.
While U.S. house price growth is expected to be 12.1 percent in 2021, it’s forecast to slow to 5.3 percent in 2022.
“The housing market remains strong even as certain obstacles have begun to slow sales across the country,” said Sam Khater, Freddie Mac’s Chief Economist.
Debi Durzi, an agent with Park Regency Realty in Granada Hills, expects prices to go up for another 8-12 months, then will level off. It’s “not necessarily going to crash,” she said.
“A market can’t keep going and going and going,” Vitacco added. “Something will change. It will shift.”
Here’s a county-by-county breakdown of June’s numbers:
- Los Angeles County’s median rose 23.1% to $790,000; sales were up 68.9% to 8,555 transactions.
- Orange County’s median rose 17.6% to $900,000; sales were up 67.2% to 4,146 transactions.
- Riverside County’s median rose 20.0% to $510,000; sales were up 43.8% to 4,790 transactions.
- San Bernardino County’s median rose 21.3% to $442,750; sales were up 41.7% to 3,547 transactions.
- San Diego County’s median rose 24.9% to $750,000; sales were up 34.5% to 4,789 transactions.
- Ventura County’s median rose 22.7% to $736,000; sales were up 47.6% to 1,185 transactions.