SoCal Home Sales and Median Prices in January

Southern California home sales fell by 6.3% over the year in January to 13,560 units (new and resale houses and condominiums). Home sales have now posted year-over-year declines in 14 of the past 16 months.

Home sales also fell over the month, down by 29.4%. Although it is normal for sales to decline between December and January, the drop last month was slightly higher than trend. Since 1988 when this data series began, the December to January decline has averaged 27.6%.

The median price across Southern California increased by 7.6% to $409,000 over the year. The median price has risen on a year-over-year basis for 34 consecutive months, but the increase was less than half the 18.4% gain recorded a year ago January. The median peak for all of 2014 was $420,000 reached last August and the median price has not changed significantly since September 2014 when it was $413,000. In most years, the median price typically reaches its highest level during the peak season in the summer months and flattens out or edges down through February of the following year.

As of January, median prices in the Southland were 19.0% below the peak price of $505,000 reached in mid-2007. Unless supported by market fundamentals (job and income growth, sound lending practices), pre-crash prices are not necessarily the bench marks to shoot for. Much of the activity running up to 2007 was fueled by an overly lax lending market that gave loans to a large number of buyers who were not able to handle the debt load.

January and February generally are not very helpful at signaling the future direction of the housing market. A lot of buyers and sellers drop out of the market during the winter months, waiting out the holidays, preferring to buy in the spring and summer months so that moves occur after the end of the school year. The big question on everyone’s mind during this waiting period is whether price appreciation and other factors will finally release the pent-up  supply of homes that this market needs in order to realize a full recovery. As prices continue to climb, more homeowners will gain sufficient equity to sell their home and trade up. Job gains and income growth along with low mortgage interest rates will continue to put upward pressure on prices unless the market sees a significant influx of inventory. 

                         Source:  http://www.dqnews.com/