With fewer homes listed across Southern California, new bidding battles have sent nearly half of sales beyond the asking price.
Buyer competition is intense despite inflation, high mortgage rates and a potential recession after for-sale inventory dipped below 25,000 homes, the fifth-lowest level in11 years, the Whittier Daily News reported.
“We expect prices to continue to rise on a month-to-month basis for the next few months because of the shortage of homes for sale,” Jordan Levine, California Association of Realtors chief economist, said in a statement. “Even with reduced homebuyer demand, California still has more homebuyers than homes to put them in.”
A sign of buyer competition: The number of days for homes on the market is shorter and price cuts are fewer than at the beginning of the year, according to Redfin. Nearly half of Southern California home sales were above the asking price in May – up from 25 percent in January.
That’s a turnaround from last summer, when prospective buyers appeared less likely to compete for homes.
The region’s home price, $35,000 below last year’s all-time high of $750,000, will likely rebound.
The median price of a Southern California home was $715,000 in May, down 0.3 percent from April and 3.8 percent below the same time last year.
Home sales are sluggish, falling on a year-over-year basis for the 18th month in a row, CoreLogic reported. The six-county region had 16,350 homes change hands in May, 25.7 percent fewer than in May 2022. It’s the second lowest number of May sales in 35 years.
With four out of five U.S. home borrowers paying 4 percent or less on their mortgage, “locked-in” owners are loath to hang “for sale” signs.
For-sale listings were 44 percent below average in May after 10 months of steady declines, according to Redfin. As a result, those who could afford a 6.4 percent, 30-year mortgage rate or pay cash vied for a limited supply of homes.
“For entry-level homes, if you find one, you put an offer in because it won’t last long,” Diane Van Korlaar, an agent with HomeSmart Evergreen Realty, told the newspaper.
Home prices in May fell across the region, while the number of sales plunged by double digits.
In Los Angeles County, the median price fell 6.3 percent to $800,000, while sales were down 24.3 percent to 5,154 homes, according to the Daily News.
Orange County’s median fell 4.8 percent to $1 million, with sales down 22.3 percent to 2,304 homes.
Riverside County’s median fell 3.6 percent to $556,500, with sales down 26 percent to 3,323 homes. San Bernardino County’s median fell 4.0 percent to $480,000, with sales down 29 percent to 2,209 homes.
— Dana Bartholomew
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