Real estate industry analysts are purposefully avoiding using such words as “meltdown,” but it is increasingly clear that home sales are in the doldrums, and no one is hesitating in throwing around such terms as “real estate shakeup.”
For 16 straight months, home sales in all of Southern California have dropped off, with a drop of 33 percent over the past 12 months.
Because property values in San Bernardino County started out well below those in Orange, Los Angeles, San Diego and Ventura counties, the local real estate market for a time seemed immune to the creeping downturn. But home sales are dropping throughout much of San Bernardino County to levels comparable to its neighbors, and even in cases where peculiarities in certain zones or districts of the county that militated in favor of real estate agents and brokers, there have been regulations put in place to cool down the rampant inflation in property values that were fueling those isolated pockets of buying frenzy. The social impact of this is myriad. While the slowdown is preventing the runaway escalation in the cost of housing that was the reality throughout most of 2022, affordability is a relevant term, and the reality is that fewer and fewer residents of San Bernardino County have the independent financial means or the ability to get the financing needed to participate in the new home ownership game.
Housing price statistics can vary, based upon the entity compiling them.
The median price of a Southern California home was $690,000 in February 2023, according to the California Association of Realtors and the real estate data firm CoreLogic. According to the California Association of Realtors and CoreLogic, that was a $2,000 drop from what the median price was in February 2022. The California Association of Realtors/CoreLogic further noted that was $70,000 less than the median price at the end of April 2022. From May 2022 until January 2023, according to the California Association of Raltors and CorLogic, home prices dropped precipitously.
According to adjusted figures, the median price of existing single-family homes sold in Southern California in February 2023 was actually $745,000.
Sales of homes throughout Southern California in February 2023 dropped 37.6 percent from what they had been a year previously, to an anemic 11,068, according to CoreLogic. That was the second weakest February sales of homes since 1988.
In March 2023, the median price of homes in Southern California jumped 3.4 percent to $770,000. The March 2023 cost of buying a home represented a 4.0 percent decrease from March 2022, where the median sold price was $802,500.
Sales, meanwhile, fell 37.6% to 11,068 transactions in the 12 months ending in February, CoreLogic reported. That’s the second-lowest tally for a February and the fourth lowest for any month in records dating back 35 years.
Normally in March, the opening of spring, sales pick up dramatically, often achieving a sales high point for the entire year. While buyer interest seemed to be brisk this year as early as January, brought on by a mortgage rate dip, that excitability did not translate into accelerated sales. The mortgage rate reduction whetted the expectation of a further drop in percentage, but that never manifested, and enthusiasm for buying collapsed.
High interest rates and low inventory are keeping the real estate market in check, according to economists.
In February, new listings in Southern California were down at 39 percent, to hear Zillow tell it. Redfin said it was slightly worse, with a drop of 40 percent.
In 2022, a whopping two thirds of homes sold brought in more than the seller’s asking price. That was the case with right around a third of the homes that have sold so far this year, according to Redfin figures show.
Moreover, on average last year, a house would be on the market for less than a month, at just over three weeks. Houses on average linger on the market for close to two months, right around eight weeks.
An important element of home buying clientele has always been existing homeowners who are looking to move up to new digs in terms of quality, size and prestige. At present, few existing homeowners who have been in place for two, three, four or more years, with existing low rate mortgages, are reluctant to sell what they have to buy a new home, even if it is a nicer one, given that they are to be gouged something fierce on the interest rates on their new mortgage.
Not only do many potential buyers not want to spend more – substantially more – on their mortgages, many simply cannot put the financing together or qualify for the loans they would need to take out, given the limitations on their income and the debt and steep interest they would need to take on. In this way, the pool of home purchasers is becoming shallower and less expansive.
The one-time drop in interest in January brought some potential buyers into real estate offices, but only a relative handful of deals closed at that time. In February, mortgage rates once again inched up. Many of those buyers, running the numbers they would be faced with, have not come back to the real estate offices.
With annual sales dropping by at least 33 percent in Imperial, San Diego, Riverside, Orange, Los Angeles and San Bernardino Counties, in all but San Bernardino County, median prices dropped, in only slightly. Still, in San Bernardino County, that trend was bucked as there was a 2.2 percent increase in price.
In March 2023, the median sold price of existing single-family homes in San Bernardino was $475,000. This is a 1.8% increase from the previous month, where the median sold price was $466,500. However, this is no change from March 2022, where the median sold price was an identical $475,000. With that uniformity in price over a one-year period, sales in San Bernardino County increased by 22.1% in March 2023 from the February 2023. Still, home sales in the county were down significantly from what they were in March 2022, that is, by 43.4 percent.
Following what was considered to be or thought to be the end of the COVID-19 pandemic in mid-2022, many people who had transitioned to at-home employment or who had otherwise lost jobs sought to jump into the real estate business. For a short time, real estate companies took on agents or would-be agents and/or would-be brokers. With the substantial downturn in home sales, there is now a massive exodus of those newbie agents.
Some new and even seasoned agents are making only a single sale over the course of four or five or six months. Many have decided that real estate sales is not the profession for them.