Southern California Home Sales Plunge in January

Despite many promising factors leading into 2015, home sales in January fell sharply from December, a modest dip from a year earlier and the 14th month in the last 16 to post year-over-year declines. While a decline in sales is typical during the winter months, many experts were hopefully that the abnormally low mortgage rates would be enough to drive the market forward. Now many agents and brokers are left asking the question: If low mortgage rates aren’t enough to sell homes, what is?

A total of 13,560 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in January 2015. That was down month over month 29.4 percent from 19,205 sold in December 2014, and down year over year 6.3 percent from 14,471 sold in January 2014, according to CoreLogic DataQuick data.

On average, Southern California sales have fallen 27.6 percent between December and January since 1988, when CoreLogic DataQuick data began.

January home sales have ranged from a low of 9,983 in 2008 to a high of 26,083 in 2004. January 2015 sales were 21.7 percent below the January average of 17,322 sales since 1988.

“The January and February statistics are always interesting, and sometimes a bit strange, but they’re not necessarily a good indication of what’s to come,” said Andrew LePage, data analyst for CoreLogic DataQuick. “That’s largely because many traditional buyers and sellers drop out of the housing market during the holidays and mid-winter, and therefore don’t close deals during those months. In recent years that’s led to somewhat higher concentrations of investor activity for January and February, and we saw that again last month. Heading into spring it will be interesting to see whether price appreciation and other factors will finally release a lot of the pent-up supply of homes out there. More owners have gained enough equity to sell and buy another home and more will be satisfied with how much their homes can fetch. At the same time, recent gains in job and income growth, coupled with low mortgage rates, could stoke demand and put significant pressure on prices unless we see a meaningful jump in inventory.”

The median price paid for all new and resale houses and condos sold in the six-county region in January 2015 was $409,000, down 1.4 percent month over month from $415,000 in December 2014 and up 7.6 percent year over year from $380,000 in January 2014. The median hasn’t changed significantly since September 2014, when it was $413,000. The median’s peak for 2014 was $420,000 in August.

Home prices in Southern California have been rising at different rates depending on price segment. In January 2015, the lowest-cost third of the region’s housing stock experienced a 9.0 percent year-over-year increase in the median price paid per square foot for resale single-family detached houses. The annual gain was 5.7 percent for the middle third of the market and 3.2 percent for the top, most-expensive third.

The number of homes that sold for $500,000 or more in January 2015 rose 2.0 percent compared with January 2014. Sales below $500,000 fell 13.8 percent year over year, and sales below $200,000 dropped 30.3 percent.

Do you think this lull was fully due to the winter “drop out” LePage was referring to? What will it take to get year-over-year gains?

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  • RE_Insider

    Here is an email from one of our readers: Well where my market is, foreign investors are buying up all the homes, tearing them down and building mansions leaving no moderately priced homes. Prices are higher than last year and all the people who thought they could buy in the last 6 mos. have found out they can’t afford a home. Many of the home that have been purchased just sit vacant with dead yards. Why our country allows this is beyond me. WE couldn’t do this anywhere else.

  • RE_Insider

    From another reader: It seems rather obvious to me why home sales are down. I am actually surprised they are as robust as they are.

    All the 20-35 year old college graduates that I know are suffering under high-interest, expensive student loans. The job market is sagging so they can not get the jobs that they were promised when they entered college. Instead, they find part-time jobs or jobs in other fields — say an assistant manager at some dress shop instead of a marketing job at a corporate office. Even students with law degrees that graduated at the top of their prestigious law school can’t find decent wages. They were “promised” jobs paying $150,000 annually but they are now making maybe $50,000 annually. They would like to buy a house, but that’s an impossibility at this time and in this job market. This may not be true for graduates who “know” someone or who are very lucky, but it is true for all that I am aware of – many are on the brink of bankruptcy OR should have already filed for bankruptcy but can’t afford to.

  • lvj777

    it will take a healthy economy and people working again