After a year of home shopping, Mike del Campo has yet to find a house with a pool, a garage and two bathrooms for $1 million or less. The few homes that are on the market are either too pricey, too shabby or too boring, he said.
“The inventory is not there. Not what I’m looking for,” said del Campo, 50, who lives in downtown Los Angeles. “The stuff I’m seeing out there is cookie-cutter. There’s no character. The stuff that I’m seeing is just a box that’s been rented for years and not maintained, or it’s a flip and they’ve done a Home Depot remodel. … They’re just blah.”
Last year, the Southern California housing market swooned as rising interest rates sidelined thousands of home shoppers, leading forecasters to predict a market slowdown this year. But then, listing inventory fell 41% over the past eight months, sparking increased homebuyer competition, particularly in the entry-level market.
And although sales and prices are below year-ago levels, they have perked up slightly in the past couple of months.
“It’s not gloom and doom,” said Dean Lueck, an agent with Compass Real Estate in Newport Beach. “We’ve got 20 buyers on the sidelines just waiting for something to come on the market.”
“We are seeing prices heating back up,” said Zillow Senior Economist Nicole Bachaud. “And a lot of that has to do with the fact that it’s the spring home shopping season. People are out looking to buy homes, and we have inventory near those record lows again.”
The median price of a Southern California home, or the price at the midpoint of all sales, fell 2.1% to $705,000 during the 12 months ending in March, CoreLogic housing figures released Tuesday, April 25, show.
But the picture is mixed.
On the one hand, last month’s median was down 7% from an all-time high of $760,000 in the spring of 2022. But on the other hand, it’s up 5% from January, when median prices dipped to a recent low of $670,000.
Southern California home sales, meanwhile, were down 37.5% to 15,307 transactions last month, CoreLogic figures show. That’s the second-lowest tally for a March in records dating back 36 years. Nevertheless, sales ticked back up, climbing more than 50% since January.
“While Southern California home sales activity is still trending notably below 2022 levels, the seasonal rebound and falling mortgage rates have attracted more buyers to the market,” CoreLogic Chief Economist Selma Hepp said in a statement. “Many sellers are still on the sidelines, keeping the inventory of for-sale homes in the region consistently low. Due to the shortage of homes on the market, both home prices and market competition have bounced back.”
A recent Zillow analysis shows demand — and price jumps — are highest for entry-level homes.
Prices were unchanged from year-ago levels in the bottom third of the Los Angeles and Orange County market, but fell 6% year over year in the top tier of L.A./Orange County homes, the Zillow analysis showed.
In the Inland Empire, bottom-tier home prices rose 1% from a year ago but fell 4% for the top one-third of the market.
“First-time buyers are facing a tough market right now,” Zillow economist Bachaud said. “Affordability is not on their side as prices remain high and have started to rise again this spring.”
Despite low inventory, some homes still take longer to sell. A five-bedroom Ontario house took three months and four price cuts to sell last month. The home’s listing agent, Joseph Huelskamp of EXP Realty in Riverside, said the property had a tenant who needed 60 days’ notice to vacate, discouraging many shoppers.
“There is buyer competition at the lower price points,” Huelskamp said. But for middle and upper-priced homes, “the buyers have the upper hand when it comes to negotiations. Either we’re getting less than asking (prices) or we’re getting incentives like credits for closing costs.”
Broker Ryan Ole Hass, owner of Align Real Estate in Santa Monica, said inflation and higher interest rates forced half of his home-shopping clients to either pause their search or look for lower-priced homes.
“The interest rates have gone up dramatically for buyers,” Hass said. “Their buying power is less, and they were struggling to find what they loved at that previous price point.”
While the number of homes selling at or above the asking price is lower than a year ago, both Redfin and the California Association of Realtors reported that sales-to-list-price ratios have been improving in the past couple of months.
Keller Williams agent Shannon Shue, who sells homes on L.A.’s West Side, said she’s been forced to enter more offers above the asking price as clients get into bidding wars.
“Instead of getting 12 offers, they’re getting five, so that’s less than half. But it’s still five offers,” Shue said. “I think buyers are being a little bit more strategic. Like they’re willing to go above asking, but then at a certain point, they have thresholds.”
After relocating to Southern California from Houston, Duncan and Alexandra Dickerson looked off and on for 1 ½ years for a home to buy but didn’t feel comfortable making non-contingent offers during last year’s buying frenzy. After getting outbid on two houses, they decided to rent for six months to see what happens.
By late February, the couple resumed their search. When a five-bedroom, two-story Dana Point house they liked popped up on the market, they jumped on the chance, offering to pay $80,000 over the asking price.
“We really wanted to win,” Duncan Dickerson, 31, said. Their offer got accepted, and on Saturday, they moved into their new home.
Would he say the market is more reasonable for buyers today than a year ago?
“It is,” Dickerson said, “but it still is more seller-friendly.”
