Southern California's homebuying market is experiencing its second-worst year on record, with sales plummeting to historic lows. High prices, elevated mortgage rates, and a slowdown in new construction are contributing to the affordability crisis. Experts say relief may come with a drop in mortgage rates, but the outlook for the market remains uncertain.
Southern California homebuying is poised to endure its second-worst year on record when the final figures for 2024 are tallied. A meticulous analysis of CoreLogic's regional transaction data spanning 37 years reveals a disquieting trend: 160,585 closed sales of existing and new residences in the first 11 months of 2024. This sluggish pace places the current year as the second-slowest in recorded history for Los Angeles, Orange, Riverside, San Bernardino, San Diego, and Ventura counties.
To put this into perspective, the current sales volume is even lower than the depths of the Great Recession's housing market crash and the extended stagnation of the early-to-mid 1990s.Delving deeper into the county-level data paints a stark picture: 2024 will likely be remembered as the second-worst sales year in four out of the six counties - Los Angeles, Orange, San Diego, and Ventura. San Bernardino experiences its fourth-slowest sales year, while Riverside falls in at the 11th position. However, it's crucial to acknowledge that this slump represents a marginal improvement from 2023, which recorded an all-time low for home sales. Consequently, Southern California has endured its two consecutive worst years for home sales in its history, dating back to 1988. Whether labeled as a calamity, correction, or even a crash, the undeniable reality is that the Southern California homebuying market is operating at 35% below its 37-year average pace.One of the primary drivers of this downturn is the persistently high cost of housing. November 2024 saw a median sale price of $775,000, the third-highest on record, trailing just $5,000 behind the peak of $780,000 set in July 2024. This benchmark has surged by 5% within a year and a staggering 42% over the past five years. Adding fuel to the affordability crisis are elevated mortgage rates returning to pre-pandemic norms after a brief period of record lows. These artificially low rates during the pandemic fueled an unsustainable surge in home prices. The average 30-year fixed-rate mortgage in November 2024 stood at 6.8%, according to Freddie Mac. While this represents a decline from 7.4% in November 2023, it is far cry from the 3.7% witnessed five years ago. Historically, mortgage rates have averaged 6.2% since 1988. A Southern California buyer can expect an estimated mortgage payment of $5,060 per month, assuming a 20% down payment, based on November 2024 figures. This places the payment at the sixth-highest on record and only $140 below the peak of $5,200 reached in October 2023
HOMESALES HOUSINGMARKET MORTGAGERATES SOUTHERNCALIFORNIA REALESTATE
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