The Southern California median home price remained unchanged in August from the previous month as rising mortgage rates made houses even less affordable for many people.
The six-county region's median held steady at $740,000, the fourth consecutive month prices didn't increase, according to data released Tuesday by real estate firm DQNews.
Sales of new and existing houses, condos and townhomes dropped 28.3% from a year earlier.
The housing market has slowed sharply in recent months, a consequence of rising mortgage rates that priced many would-be buyers out of the market.
Rates have more than doubled in the last year and topped 6% last week for the first time since 2008. The steep rise in borrowing costs adds more than $1,000 to the monthly payment for a median-priced home of $740,000 — a cost many can't afford.
For buyers who can stomach the increases, there are some bright spots. The Southern California median price — the point at which half of homes sold for more and half for less — is 2.6% less than the all-time high reached this spring.
And compared with the white-hot market of recent years, the buying experience could be less stressful, without the need to bid on dozens of homes before either securing one or giving up altogether.
"That maddening competition is gone," said Jeff Lazerson, president of brokerage Mortgage Grader, noting sellers are more open to low down payment offers they previously would have ignored.
When it comes to individual counties, the median is down more than regionwide, ranging from 2.8% below the all-time high in Riverside County to 6.7% below the peak in Orange County.
Compared with July, the median fell in all counties except Riverside. In Orange County, the median dropped below $1 million, a threshold the pricey county hit for the first time in March.
Because the median is the midpoint of all sales, changes to it reflect both a change in actual values and in the type of homes selling in a given month.
Selma Hepp, an economist at real estate firm CoreLogic, said declines in the stock market have contributed to a bigger drop-off in luxury home sales, which exaggerated the declines in the median.
A home price measure from Zillow, which tries to account for such changes in the mix of homes selling, shows the price of a typical home is still above $1 million in Orange County and overall prices in Southern California haven't fallen as much as the median indicates.
Zillow data show declines since the peak that range from a 0.5% drop from the all-time high in San Bernardino County to a 2.6% decline in San Diego County.
By whatever measure, prices in all counties are higher than a year earlier, a reflection of strong demand before rates shot up.
Regionwide, the median is 8.8% higher than a year earlier, which combined with higher rates means housing is drastically more unaffordable than in 2021.
The year-over-year increase in prices is getting smaller. In April, prices were up nearly 17% from a year earlier, and a growing number of economists predict home prices will turn negative on a year-over-year basis in 2023.
But few, if any, major analysts predict declines similar to those seen in the Great Recession.
That's in large part because even in the event of a recession, experts say tighter lending standards should limit the number of foreclosures, a wave of which sent Southern California prices down 50% from 2007 to 2009.
According to the California Assn. of Realtors, home prices statewide and in Southern California are likely to fall about 7% in 2023 compared with 2022, in part because mortgage rates are expected to stay elevated.
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This story was originally published September 20, 2022 2:05 PM.