California homeowners sell as analyst sees ‘new cracks’ in market
Southern California’s housing market enters the typically slower-selling fall season relatively awash in listings amid a significant cooling of house hunters’ willingness to make a deal. As summer ended, the four-county region covered by the Southern California News Group had 36,923 listings, up 6,548 in a year or 22 percent. It’s also up 10 percent vs. the six-year average. Note that Southern California builders’ unsold inventory, which is not included in this study, stood at 3,336 in the second quarter, the highest in six years.
Sellers have rushed to market as year-to-date supply has grown sharply: Up 13,774 listings vs. a rise of 2,787 in the same period in 2017 — yes, a nearly five-fold increase.
Surprisingly, in a market that was once seen as supply-starved, house hunters have pulled back despite the significant increase in choices.
On Sept. 20 there were 11,603 new escrows, down 1,473 sales contracts in 12 months, or an 11 percent drop. Don’t blame the local job market for the reluctance to buy: Southern California payrolls are up 1.7 percent in the year ended in August, just a bit slower than 1.9 percent a year ago and 2.6 percent two years ago.
More supply and fewer purchases mean “market time” metric for selling speed rose to 95 days vs. 70 a year earlier and an average 82 days in 2012-2017. This is the slowest end-of-summer market in four years.
Local home seller’s quick loss of market power is likely due to high homes prices and rising mortgages rates. By one metric, the number of Southern California’s “affordable” homes has been at least halved in five years.