High demand, a limited supply of homes for sale and record-low mortgage rates continued to drive up Southern California home prices and sales last month.
January’s median home price, or price at the mid-point of all sales, was $599,500, according to a DQ News/CoreLogic report released Monday, Feb. 22.
Home prices in the six-county region climbed 13% in the 12 months ending in January, marking the sixth consecutive month of double-digit price gains.
Sales likewise showed continued strength, rising for a seventh straight month. Sales volume jumped 13.5% to 17,352 transactions — the biggest sales tally for a January in 14 years.
Double-digit gains for both prices and sales occurred just 41 times in the past 32 years, CoreLogic figures show.
“The market is absolutely crazy because there are very few listings,” said Dianne Speaker, an agent for Coldwell Banker Town and Country in Redlands. “There are more buyers than listings. That’s why prices are going up.”
Despite persistently high unemployment rates, the housing market has defied the pandemic since last summer as homebuyers rushed to take advantage of record-low mortgage rates that boosted their buying power.
“There really are good fundamental reasons for why demand (is so high),” said Dean Wehrli, a principal with Irvine-based John Burns Real Estate Consulting. “Supply is tremendously constrained. And people aren’t spending money on other things. … A lot of that (cash) is going into the housing sector.”
The average mortgage rate hit an all-time low in December when buyers signed contracts for most of January’s closed transactions.
The 30-year, fixed-rate mortgage averaged 2.73% in the three months ending in January, for example, vs. 3.68% a year earlier. That translates into 13% more buying power for homebuyers.
Despite rising prices, the typical house payment for a median-priced home rose just $4 over the past year, from $1,949 a month for a median-priced home in January 2020 to $1,953 last month.
“These low mortgage rates … have made that demand go wherever it could go because more people can afford a house,” Wehrli said.
Meanwhile, the number of homes to bid on has decreased steadily since May, dropping to just over 17,000 homes for sale at the start of February, according to Reports On Housing. That’s a little more than half of the listings on the market a year earlier.
The pandemic also created more demand for bigger houses, especially in the Inland Empire, since more people are working out of their homes, market observers said.
Builders “are selling homes like crazy” in Menifee, south of Riverside, drawing buyers from south Orange and north San Diego counties, said Scott Wild, a vice president for the John Burns consulting group.
“If I only have to go into the office once a week, I can deal with the horrible commute,” Wild said. “If the house is half the price, I can do it.”
Speaker, the Coldwell Banker agent, just sold a two-story house in Redlands next to a 9-acre park for just under $635,000. Four of the six bidders came from Los Angeles County, she said.
What’s drawing so many Angelenos east?
“Price,” Speaker said. “That home would be pretty close to $1 million (in Los Angeles).”
In late summer and early fall, as many as 20 buyers camped out to buy new phases of Landsea Homes’ ShadedTree development in Ontario, where houses with yards sell for under $800,000. Landsea began offering a home-office package that includes sound insulation, smart-home technology, extra outlets and USB ports and LED lighting.
“We offer a lot more utility in our homes,” said Mike Forsum, president and chief operating officer for the Newport Beach-based builder. “Buyers can work from home, eat from home,exercise from home, and do a lot more things. They’re going to the office one or two times per week, maybe none. So the home is serving a lot more purposes.”
Prices and sales decreased slightly from the month before, which is typical for January. But January’s median still came within $10,500 of the all-time high of $610,000 reached in September.
Home prices and sales were up across the board in all six Southern California counties and for all housing types, new and existing.
CoreLogic figures show the median price of an existing single-family house increased 14.3% to $640,000, with sales up 12.3%. The median price for an existing condo was $505,000, up 11%, while condo sales rose 22.1%.
John Burns consultants and housing economists predicted the market will stay robust so long as mortgage rates stay low and new home construction continues to lag.
Here’s a county-by-county breakdown of median prices and sales:
Los Angeles County: $690,000, up 12.6%; sales totaled 5,705 units, up 14.3%.
Orange County: $799,000, up 6.7%; sales totaled 2,587 units, up 22%.
Riverside County: $455,364, up 17.1%; sales totaled 3,059 units, up 10.1%.
San Bernardino County: $402,500, up 11.8% to a record high; sales totaled 2,608 units, up 20.7%.
San Diego County: $640,000, up 9.4%; sales totaled 2,647 units, up 1.8%.
Ventura County: $655,000 up 11.2%; sales totaled 746, up 16%.
— SCNG staff writer Jonathan Lansner contributed to this report.
The business of real estate is more than just business to Lynn Range, it is a passion project as she offers her clients a mix of local intelligence, industry knowledge, and transactional expertise.Let's Connect