Southern California home buying increases despite rising prices – Orange County Register

Southern California’s real estate market recovered somewhat in October, with prices near record highs and sales recovering from the dismal decline in September.

A drop in interest rates the previous month – when most sales contracts were signed in October – may have attracted more buyers to the market.

However, October sales were still one of the lowest in four decades.

The median price of a home in Southern California – or the price in the middle of all sales – rose 5% to $775,000 in the 12 months ended October, real estate data firm CoreLogic reported Wednesday, Dec. 4.

The average home price in October was the second highest on record and was just $5,000 below the record high of $780,000 reached in July.

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Prices have increased month-to-month in 16 of the last 23 months, a sign that despite an increase in homes for sale, there are still more buyers than offers.

In October, prices rose in all six of the region’s counties, with San Bernardino’s median hitting a record high of $525,000, CoreLogic figures show.

Sales also rose by 10% to 14,662 transactions in October.

This is the fourth lowest number of all October transactions since 1988 and is well below the October average of just over 22,000 transactions.

There have been nearly 146,000 home sales in the six-county region so far in 2024, compared to an average of 223,000 sales in the January to October period.

Still, there were 2,000 more deals in October than in September, an increase of 17%. Typically, sales are either down or flat from September to October.

Real estate economists noted that sales appear to be picking up even more in November as the election wraps up and the Federal Reserve cut interest rates for a second time. Both Redfin and the National Association of Realtors reported increases in the number of new sales contracts signed in October and early November.

“After nearly two years of suppressed home sales, home buying momentum is picking up,” NAR chief economist Lawrence Yun said in a statement last week. “Even with mortgage rates rising slightly…continued job gains and increased housing inventory are bringing more consumers into the market.”

Another indicator of higher demand: Figures from the Mortgage Bankers Association show that mortgage purchase applications rose to their highest level since the start of the year, Bloomberg reported.

Although the number of homes for sale remains below average, listings in Southern California are up 47% year-to-date, according to brokerage Redfin. In October, just over 54,000 homes were for sale in the region.

“Higher inventories … offer potential buyers more options than at the beginning of the year,” Bloomberg quoted MBA economist Joel Kan as saying.

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Lower interest rates also make buying a home more attractive.

According to Freddie Mac surveys, interest rates fell to a two-year low in September as October deals went under contract.

Nevertheless, real estate prices remain alarmingly high.

The average buyer paid $844,000 for a home in Southern California — and nearly $1 million in Los Angeles and San Diego counties. At least half of the homes in Orange County sold for more than $1.28 million.

The average price of a condo — once seen as an affordable option for entry-level residents — was $682,500 across the region and ranged from $700,000 to nearly $800,000 in Los Angeles, San Diego and Orange counties.

Over the last five years, prices rose the most in Orange and San Diego counties, increasing by 45% and 35%, respectively. In comparison, the regional average is 28%.

Real estate economists expect that real estate prices in the USA will continue to rise in the new year despite persistently high mortgage interest rates.

Realtor.com released a forecast that mortgage rates will average 6.3% in 2025, compared to an average of 6.7% so far this year. House prices will rise another 3.7% next year after rising 4% this year.

Redfin economists agree with the 4% housing price forecast, but expect mortgage rates to be slightly higher, averaging just under 7%. Redfin economists expect home sales to rise in 2025, largely due to pent-up demand. But high prices and high rates still leave some buyers unable to purchase a home.

“Many Americans will remain renters,” the Redfin forecast says.

Here is a breakdown of Southern California prices and sales by county with annual percentage changes:

– Los Angeles County’s median home rose 5% to $875,000; Sales rose 15.3% to 4,899 transactions.

– Orange County’s median home value rose 6% to $1.15 million; Sales rose 4.7% to 1,994 transactions.

– Riverside County’s median home rose 5.4% to $585,000; Sales rose 11% to 2,808 transactions.

– San Bernardino County’s median home value rose 6.1% to $525,000; Sales fell 1.6% to 1,945 transactions.

– San Diego County’s median home value rose 7% to $879,000; Sales rose 9.6% to 2,372 transactions.

– Ventura County’s median home rose 0.7% to $830,000; Sales rose 32% to 644 transactions.

Originally published: December 5, 2024 at 8:00 am PST