Southern California homebuying will have suffered its second-worst year on record when the final tally for 2024 is done.
My trusty spreadsheet reviewed 37 years of CoreLogic’s regional transaction data and found 160,585 closed sales of existing and new residences in 2024’s first 11 months. Going back to 1988, that’s the second-slowest sales pace in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties.
That’s less homebuying than in the depths of the bubble-bursting Great Recession. That’s fewer sales than the extended lethargic markets of the early-to-mid 1990s.
Contemplate the slump at the county level with 2024 being the second-worst sales year in four of the six: Los Angeles, Orange, San Diego and Ventura. It’s the fourth slowest for San Bernardino and No. 11 for Riverside.
Now for the good news. Local homebuying for these past 11 months is up 3%.
There’s a catch. This increase is a rise from 2023’s record low total. So Southern California homebuying just had it’s two worst years for sales, back-to-back, in a history dating to 1988.
Totally unaffordable
Call it what you must: calamity, correction or even crash. Southern California homebuying pace is running 35% below its 37-year pace.
Why? It’s simple: Local homes are totally unaffordable.
Price is a big part of the problem. November’s $775,000 median sale for the region was the third-highest in history, off just $5,000 from the record $780,000 set in July 2024. This benchmark is up 5% in a year – and, more painfully, 42% higher in five years.
Amplifying that sticker shock are mortgage rates returning to typical levels after hitting record lows, mid-pandemic. That stimulus overheated home prices.
The 30-year fixed-rate loan averaged 6.8% in November, according to Freddie Mac. Yes, that’s off from 7.4% in November 2023, but it’s nowhere near the 3.7% seen five years ago. By the way, since 1988, mortgage rates have averaged 6.2%.
Ponder what stubbornly lofty pricing and high rates means to a house hunter’s checkbook.
A Southern California buyer’s estimated house payment – assuming a 20% down payment – was $5,060 for November, the sixth-highest on record and only $140 below the $5,200 peak of October 2023.
To be fair, this payment yardstick is off 2% in a year. But it’s up 102% in five years. Yes, you read that correctly: Double!
Ponder that if you put 40% of your household income toward November’s estimated payment, you’d need to be making $152,000 a year. Oh, don’t forget the $155,000 in cash for the downpayment.
Or compare the payment upswing to local paychecks growing 28% in these same five years, according to one federal wage measurement. Essentially, the rise in house payments is almost quadruple pay raises.
Builders offer little help. Only 9,057 new homes sold in 2024’s first 11 months. That’s the slowest pace in the 37-year history, down 29% vs. 2023 and 70% below average sales since 1988.
More existing homes for sale also failed to temper prices or boost homebuying.
Active listings jumped 29% during 2024’s first 11 months, according to Realtor.com stats. Nevertheless, prices got some support from Southern California’s still-thin supply, which is 38% below pre-pandemic 2019.
Foggy view
You can see why hopes for a homebuying revival are tied to cheaper mortgage rates, when looking at November’s numbers.
The six-county region had 13,157 home sales – up 6% in a year as rates took a modest dip last autumn. The 30-year rate hit 6.2% in September – a two-year low.
Now, even with cheaper financing, November’s sales were still the third-worst for the month since 1988. And the modest buying bump’s future is foggy.
Despite the Federal Reserve cutting the interest rates it controls, mortgages reversed gears and climbed past 7% to start 2025. Now, combine that costlier financing with the fact that all six counties saw price gains in the year ended in November.
Here are November’s results, ranked by county price gain …
Orange: $1.18 million median, 7% higher in a year with 1,895 sales – up 4%.
Riverside: $585,000 median, 7% higher with 2,595 sales – up 3%.
San Diego: $888,000 median, 4% higher with 2,275 sales – up 15%.
Los Angeles: $869,000 median, 3% higher with 4,264 sales – up 12%.
Ventura: $835,000 median, 1% higher with 501 sales – up 4%.
San Bernardino: $520,000 median, 1% higher with 1,627 sales – off 14%.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]
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