Los Angeles Market Update - Sept/Oct 2022
*The sales data is out for August. Home sales are a lagging indicator and most analysis about the previous month (August) is out by the last week or two of the following month.
Home sales perked back up in August as home sales rose 8% in SoCal, despite summer a slowdown. The median price of a Southern California home – or the price at the midpoint of all sales – was $740,000, unchanged from July.
That’s a turnaround from previous month-to-month declines after 30-year mortgage rates dipped to 5 percent in July and early August.
Home prices and sales, which had been dropping for the previous several months, leveled off or increased in August. In fact, price growth in August actually picked up on both a monthly and annual basis, and pending sales suggest a bounce-back for homes priced $2 million and above. While sale prices over the last couple months have eased, they are still holding up above last year’s level.
Homes are taking longer to sell, and fewer owners are putting their properties on the market. New listings dropped 30 percent from a year ago to just under 13,000 in August. Prices of homes are still rising but at a slower rate of 8% as opposed to 15-23% over the last two years.
Homebuilders sentiment has dipped in recent months and more developers are providing incentives, including price reductions, in order to attract buyers back into the market.
California existing single-family home sales bounce back amid temporary rate reprieve:
Mortgage rates surpass 6.5% mark for first time since 2008: After easing slightly through July and August, mortgage rates jumped significantly higher last week. The increase in rates will continue to weigh on homebuyer demand in coming months, as evidenced by the most recent decline in mortgage applications.
Demographic of a Buyer: First-time buyers were responsible for 29 percent of sales in August and individual investors/second-home buyers purchased 16 percent. Twenty-four percent of sales were all-cash.
Silver Lining: As fewer homes come on the market, and despite the lower demand from buyers, homes that are prepared properly to sell and are in high demand areas (such as highly rated school districts) are still seeing multiple offers but fewer (think 2-4 offers instead of 8-10).
The Key is to prepare a home for sale as best as possible with help from your Realtor. Your Realtor can suggest what improvements to spend money on that will best show off the home and help yield the best return on your investment.
Sources: California Association of Realtors (CAR).