Southern California home prices jumped 6% before coronavirus scare
Southern California's 2020 housing market got off to a good start before the pandemic shook the economy in mid-February, CoreLogic figures show, with both prices and home sales up in the six-county region from February 2019 levels.
But that's a reflection of deals signed in January, many before the first COVID-19 case showed up in the United States. Agents and brokers now are bracing for a possible sales drop, telling agents to work from home and resorting to more online showings.
The median price of a Southern California home — or the price at the midpoint of all sales — was $541,000, up 6% from the year before, according to a DQ News analysis of CoreLogic figures released March 18.
That's the fourth-highest median in records dating back to 1988. And it's the highest median home price for a February on record.
Sales in the region, meanwhile, totaled 15,412, up 14.3% from your-ago levels. It's also the highest sales total for a February since 2013.
The numbers reflect buyer and seller sentiment before the severity of the coronavirus outbreak reached its current levels, shutting down bars and restaurants throughout the region as many hunker down in their homes.
Southern California News Group interviews with nearly two dozen industry professionals turned up signs that some sellers were canceling open houses or pulling their homes off the market, while some buyers were holding off making a purchase due to economic jitters or stock market losses.
A National Association of Realtors survey found one in three California home sellers were altering how their home is viewed, with some apparently turning to virtual online home tours. About 4% of California agents have reported homes being taken off the market, and 21% said buyer interest had decreased due to coronavirus, the survey showed.
The latest CoreLogic numbers also fail to reflect the Federal Reserve's action slashing interest rates, sending mortgage rates to historic lows two weeks ago. The average 30-year, fixed-rate mortgage was 3.36% as of last Thursday, March 12, up from a record low of 3.29% a week earlier.
Agents reported buyers were jumping on low mortgage rates, which is boosting their buying power. But that was before President Trump called on Americans to avoid gatherings of 10 or more people to help stem the virus' spread.
Buyers eager to take advantage of lower rates may face more competition after Southern California home listings dropped 30% from a year ago — possibly because coronavirus has spooked sellers.
Reports On Housing reported there were 29,659 residences on the market as of March 5.
But new escrows during the month ending March 5, were up 12% to 17,385 homes. Those are deals that are likely to close in April.
"The coronavirus will affect the housing market to some degree but not to the extent that many fret about," Reports On Housing author Steve Thomas wrote.
Evelyn Lauchenauer, a Berkshire Hathaway Home Services agent in Santa Monica, said buyer demand is high, but more and more sellers are holding off, waiting to see what will happen with the market.
"My buyers are very enthusiastic. They love the low interest rates, and they're looking for properties," she said. "(But) sellers are taking it a little slower."
Lauchenauer said her brokerage is telling agents to work from home and to wash their hands and keep their distance when they do go out.
"I think there may be fewer sales," she said. "People are going to be a lot more careful and take a little more time to reevaluate the market."
Seattle-based online brokerage Redfin has has canceled all open houses for properties listed by its agents and has launched on-demand virtual home tours.
L.A. County-based brokerage Deasy Penner Podley is offering agents advice on setting up virtual home tours and is advising agents to use FaceTime and other platforms instead of meeting prospective buyers face to face.
"There's Google Meetings, which we're using a lot, and Zoom, which we're using a lot," said partner Mike Deasy. "Obviously, there's situations where if a 3-D virtual tour doesn't work, the last resort (is to meet in person) if a client wants to see a house."
Unlike most agents interviewed, Deasy thinks home shoppers may be spooked as well.
"There may be buyers hesitant to venture out," he said.
But Rancho Cucamonga agent Pedro Molina of Remax Champions said he's getting calls every day from buyers wanting to see a home.
"They're motivated because the Fed cut rates," Molina said. Business still is normal, he said, but for how long? Lenders are starting to fall behind, and the backlog will only get worse if counties close their recorder offices, halting the recording of deeds.
"That means no deeds, no sales. Everything stops," Molina said.
As of last week, he said, coronavirus had not put a damper on the market. "But there was a great, tectonic change just in the last week. I don't know how that will affect numbers this week," he said.
The local housing market already had been showing markedly improved performance starting last summer when buyers began taking advantage of already — low mortgage rates.
Both prices and sales were up across the board in all six counties in the region as well.
The median price of an Orange County home hit an all-time high of $748,000 in February, up 6.9% year-over-year. And the median price for an existing house also hit a record high of $575,000 regionwide, up 8.7%.