The long-awaited drop in national and regional home prices might finally have arrived, though it may not necessarily be the case in Pasadena’s market.
According to a study by DQNews released Tuesday, Southern California home prices and sales were lower in June than in May, suggesting that the housing slowdown is actually beginning to be reflected in lower home prices.
The DQNews study pointed out that it is the first time that Southern California’s red-hot housing market saw lower median home prices—the price point where half the homes sold for more and half for less.
The six counties of the Southern California region, which includes Los Angeles, Orange, Riverside, San Bernardino, and Ventura, and the Inland Empire, saw a median sale price of $750,000, compared to $760,000 in May.
According to DQNews, home sales dipped on a month-over-month basis but sank, compared with 2021. 20,289 homes were sold in June —a drop of 25.3%—compared with 27,143 the previous June.
But these lower prices are still considerably higher than last June, when the median price was $679,000.
With sky-high prices across the region, small movements in interest rates can mean dramatic differences in monthly mortgage payments.
The LA Times recently reported that Southern California bidding wars are becoming less frequent and home inventory is rising, as a number of home sellers are also being forced to lower their perhaps overpriced homes in order to find a buyer.
Also, for the week ending July 14, 30-year mortgage rates rose to 5.51%, down from a 2022 high of 5.81%, but still up from 3.11% at the start of the year. Currently, according to Redfin, the national average 30-year fixed rate mortgage rate is at 5.5% and down 2.5 points year over year.
In the Pasadena area, in June 2022, home prices were up 11.2% compared to last year, selling for a median price of $428,379, Redfin noted.
On average, the number of homes sold was down 17.4% year over year and there were 609,147 homes sold in June this year, down from 737,598 homes sold in June last year, said Redfin.
Redfin also noted that the median sale price for U.S. homes dropped 0.7% from its record-breaking June peak during the four weeks ending July 10. The seasonally-adjusted Redfin Homebuyer Demand Index—a measure of requests for home tours and other home-buying services from Redfin agents—was down 18% year over year during the week ending July 10.
Sellers’ asking prices also came down 3% from May, as the number of homes with price drops rose to another new high.
At the same time, home supply posted its first year-over-year increase since August 2019 as pending sales continued to slide.
Redfin chief economist Daryl Fairweather, said last week, “Inflation and high mortgage rates are taking a bite out of homebuyer budgets. Few people are able to afford homes costing 50% more than just two years ago in some areas, so homes are beginning to pile up on the market. As a result, prices are starting to come down from their all-time highs. We expect this environment of reduced competition and declining home prices to continue for at least the next several months.”