A year-long cool down is taking its toll on Southern California home sellers, local agents and economists say.
Homes sit longer. Asking prices are being reduced. And now, many sellers have to pay closing costs and pitch in for repairs to get their houses off the market.
"They're getting a little scared, the sellers are," said Riverside broker Maria Herrera. "Everybody's talking, is (the market) going back down? I'll be really curious to see what happens this year."
Economists, meanwhile, say sellers shouldn't be scared, but they should be prepared for the new reality. "While sellers still hold a good set of cards, buyers in some high-price coastal markets have recently drawn aces with rising inventory, increasing price cuts and longer time on the market," said Ralph McLaughlin, deputy chief economist for CoreLogic.
The real estate data firm's latest numbers bear that out.
Southern California home sales fell 11.7% last month from February 2018 levels, with just 13,466 houses, condos and townhomes changing hands, CoreLogic reported Wednesday, March 27. That's the smallest sales tally for a February in 11 years.
By comparison, sales averaged 15,000 transactions every February since the Great Recession hit a decade ago. Sales in the six-county region have been down in 11 of the past 12 months.
With sales ebbing, prices barely budged last month — and even fell for the first time in seven years in high-cost Orange County.
The median price of a Southern California home — or price at the midpoint of all sales — was $512,500 last month, up just $6,000 or 1.2% from February 2018 median, CoreLogic reported. That's the second-smallest gain since prices started an 83-month upward streak in April 2012.
Southern California's median sale price also was down $24,500 from the all-time high of $537,000 reached last June.
A few factors still favor home sellers. The magnitude of the year-over-year sales declines has been easing. For example, sales took a 20% nosedive in December.
"The lessening of the annual sales declines likely reflects, among other things, a significant drop in mortgage rates since they hit a seven-year high last November, as well as more listings compared with early last year and an improving stock market in early 2019," said CoreLogic Analyst Andrew LePage. "Those factors are likely putting some would-be buyers back into a home-shopping mode."
Riverside agent Christina Clark said she recently closed on a four-bedroom Corona Hills pool home that got three offers and sold for $520,000, the asking price, in just 24 hours.
"With ... interest rates dropping, it opened things up for people to qualify for a higher price point," Clark said. "The market is extremely busy now. Every agent I know has multiple deals in escrow. Buyers are out looking."
While activity perked up for midpriced homes in the past several weeks, luxury housing remains sluggish, said Colin Delaney, broker for GateHouse Properties in Costa Mesa.
"We're still seeing multiple offers in prices below $1 million," Delaney said. "Over $1.2 million, it's a different story."
CoreLogic confirmed that trend, reporting sales declines of nearly 14% for $1 million-plus homes vs. a 10% year-over-year sales drop for the under-$1 million market.
Up or down?
Some economists remain bullish on the housing market. Chris Thornberg, a founding partner with Beacon Economics, predicted sales could be back in positive territory by this summer.
"All these ridiculous claims of a housing downturn is just ridiculous," Thornberg said. "The economy is humming along like nobody's business. The fact that mortgage rates have dropped will not cause a rebound. It's simply going to make the rebound stronger."
Six inches of rain in January and another six to 11 inches in February could have accounted for part of February's sales decline, added Herrera, broker for The Herrera Group in Riverside.
A four-bedroom, one-story house she listed in San Bernardino took a month to sell, closing in February at San Bernardino County's median sales price of $335,000.
"At the beginning of this year and the end of last year, houses were sitting for a lot longer than a month," Herrera said. Although the house sold for its asking price, the sellers still had to pay closing costs and cover repairs.
"(Sellers) don't have the upper hand they did a couple years back," Herrera said. "A lot of sellers are getting hit with a reality check in this market."
There's also less pressure on buyers as listing inventory rises. As of March 21, Southern California had nearly 41,000 listings, or about 20% more than the average for the previous six Marches, according to Reports On Housing.
CoreLogic figures showed home sales declines in all six counties, with drops ranging from 8.1% in San Diego County to 17.1% in Orange County. Sales were down 8.9% in Riverside County, 11.8% in Los Angeles County, 12% in Ventura County and 13.8% in San Bernardino County.
Just four of the six counties had year-over-year price gains: The median home price rose 0.9% in Los Angeles County to $585,000, 1.7% in Riverside County to $381,500, 1.8% in Ventura County to $565,000 and 2.6% in San Diego County to $549,000.
San Bernardino County's median remained unchanged from a year ago at $335,000. Orange County's median, meanwhile, fell $10,000 or 1.4% to $700,000.
Thornberg attributed Orange County's price drop to volatility that typically crops up during the winter months. But the drop took Costa Mesa broker Delaney by surprise.
"The neighborhoods I work in haven't had price drops," he said. But "high-end neighborhoods in Laguna Beach and Newport Beach, those prices have come down. That's probably part of the pull. The entry-level houses still are in high demand."
