For the third month in a row, the median home price across Southern California has stayed flat at $382,000. There are multiple factors that are resulting in the current stall: higher mortgage rates, skyrocketing prices, an expanding supply of homes and investors pulling back after swarming the market. This cooling has suppressed the fear of another housing bubble and could signal a return to normality.
The California Association of Realtors predicts that year-over-year price increases will return to 6% next year which is more in line with historic norms. The run-up in prices peaked in June with an outstanding 28% year-over- year increase in the median price. This increase was a result of sellers getting multiple bids over asking price among a heavy demand and scarce supply.
Part of the slowdown is seasonal and another part is attributed to a more empowered class of buyers who won’t buy if they feel the house is not perfect. Buyers are also demanding more repairs from sellers, and getting them.
The housing recovery started in 2012 and shifted into overdrive this year as traditional buyers and investors rushed into the market trying to take advantage of rock-bottom interest rates and below average home prices. Buyers were convinced that the housing crash had finally bottomed out and began placing bids without even touring the homes. Families were forced to do battle with all-cash investors amid a historic shortage of homes.
Now prices and mortgage rates have risen to the point where many buyers have decided to check out. The current waning demand has caused some sellers to reduce their asking prices. As the number of September listings rose in Southern California, a total of 19,112 houses and condos were sold resulting in a 17.1% drop from August.
The slowing is not just a local but a national trend: 20 of the largest metro markets have seen a decline in home sales. Even homes in good locations with the right price are sitting on the market for longer than anticipated. Despite the slow months inventory remains tight and experts say the housing recovery continues to move forward, adding that home prices will rise slowly over the next year.
Have you witnessed this slowdown in your area? We’d like to hear from you.
Read the full story here: