Prices are rising at 2-3x inflation and even higher in certain markets. Housing price appreciation is outpacing wage growth. It is not sustainable long-term. Either prices will correct lower or housing will just have no growth or below inflation level growth.
Southern California market sales for summer were already a flop. It is a sign that the market is shifting. I don’t really see how prices can go up even further without a significant catalyst like above average wage growth. Foreign buyers are already baked into the demand number by the way for those of you who think foreign buyers are still rushing in. Foreign buyer demand is old news. The real question is will more foreign buyers rush in or was it just a short-term trend.
- Sales of both new and existing houses and condominiums dropped 11.8 percent year over year, as prices shot up to a record high, according to CoreLogic.
- The median price paid for all Southern California homes sold in June was a record $536,250, according to CoreLogic, a 7.3 percent increase compared to June of 2017.
- In the past, California, one of the largest housing markets in the nation, has been a predictor for the rest of the country.
Southern California home sales hit the brakes in June, falling to the lowest reading for the month in four years. Sales of both new and existing houses and condominiums dropped 11.8 percent year over year, as prices shot up to a record high, according to CoreLogic. The report covers Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties.
Sales fell 1.1 percent compared with May, but the average change from May to June, going back to 1988, is a 6 percent gain.
The weakness was especially apparent in sales of newly built homes, which were 47 percent below the June average. Part of that is that builders are putting up fewer homes, so there is simply less to sell.
“A portion of last month’s year-over-year sales decline reflects one less business day for deals to be recorded compared with June 2017,” noted Andrew LePage, a CoreLogic analyst. “But affordability and inventory constraints are likely the main culprits in last month’s sales slowdown, which applied to all six of the region’s counties and across most of the major price categories.”