Despite the pandemic, Southern California home prices rebounded in July for a second straight month, with medians at all-time highs in four out of six counties.
This time, sales revived, too, rising to the highest level for any month in two years, according to new housing data from CoreLogic/DQ News.
The median price of a Southern California home, or price at the mid-point of all sales, was $585,000 in July, up 8.5% year over year and up almost $30,000 from June’s record high. That’s the biggest one-month price jump in CoreLogic’s 32-year-old database.
Los Angeles, Orange, Ventura and San Diego all saw record home prices. Riverside and San Bernardino counties were at their second-highest levels, just short of records set in late 2006.
And after three straight months of drastically plunging home sales, transactions in July rose 2.5% from year-ago levels to 22,656 homes sold.
That’s almost double the number of sales in May when buyers and sellers shunned the market under stay-at-home orders.
The sales surge occurred despite a paucity of homes on the market.
Southern California had just under 26,600 homes on the market as of Aug. 6, a seven-year low, figures from Reports On Housing show. By comparison, the region had almost 20,000 more homes for sale a year ago. So even though listings dropped 41%, sales contracts still jumped 21%.
The gains came in the face of major economic upheaval caused by the coronavirus pandemic. More than 22 million Americans lost their jobs in the aftermath of lockdowns last March, and the gross domestic product fell more than 30% in the first quarter. Even with 9.3 million people rehired as the economy began to reopen in recent months, U.S. employment still is off by about 60%.
So how can the housing market be soaring?
The answer, said Danielle Hale, chief economist for Realtor.com: “Strong levels of demand. Limited inventory. Along with low mortgage rates helping people stay in the market in a way most people are surprised by.”
Freddie Mac reported the rate for a 30-year fixed mortgage averaged 2.99% for the week ending Thursday. Rates have been under 3% five of the past six weeks, “propelling consumer demand and enabling a price rise,” Hale said in a recent online video.
In addition, CoreLogic and state Realtor economists said, higher-priced home sales are up significantly compared with last summer, shifting price averages even higher.
“At the same time, higher sales are reflecting much of the pent-up demand that was missed in the traditional spring home-buying season and improvement in affordability resulting from historically low mortgage rates,” said CoreLogic Deputy Chief Economist Selma Hepp.
On the other hand, many of the unemployed are mostly in the rental market, Hepp added. As a result, rents are softening just as home prices are going up.
Frank Kashou of Long Beach, an IT technician who sells real estate on the side, usually only makes three or four sales a year. He already hit that mark last month. But his buyers are having a hard time making a deal because they kept getting outbid. One couple trying to buy a home in Lancaster had to make six offers before finally getting one accepted, he said.
“We’d put in an offer, and there were six offers ahead of us,” Kashou said.
Norco-based agent David Sanchez is having similar problems finding homes for clients in the Inland Empire. He’s even had clients getting outbid in Hesperia, 80 miles northeast of downtown Los Angeles.
Riverside and San Bernardino counties are being flooded with home shoppers from Los Angeles who are seeking more space after being locked in their apartments for months.
“With this new work-at-home, you can live two hours away and be on Zoom,” Sanchez said. “Why are you going to pay $3,000 a month for an apartment in L.A.? … They want space. They want a back yard. A place to put in a gym or a Zoom room. The money’s already there. They’re paying top dollar for rent.”
Here’s a breakdown of sales and prices by county:
Los Angeles: 6,818 homes sold, down 2.3%. Median price: $670,000, up 5.5%.
Orange: 3,450 homes sold, up 6.7%. Median price: $775,000, up 6.3%.
Riverside: 4,054 homes sold, down 0.4%. Median price: $430,000, up 9.1%.
San Bernardino: 3,057 homes sold, up 8.1%. Median price: $375,000, up 9.8%.
San Diego: 4,253 homes sold, up 6.6%. Median price: $634,000, up 9.3%.
Ventura: 1,024 homes sold, up 2.6%. Median price: $635,000, up 6.7%.
Originally published here.