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LA, Orange County homebuying slumps to 2nd-slowest sales on record

July 8, 2023

Homebuying in Los Angeles and Orange counties fell 24% in a year as pricey house payments scared away potential buyers.

Sales of houses and condos, existing and new, totaled 7,458 in May in the two counties, according to CoreLogic. That’s up 17% for the month but down 24% for the year.

So just how slow is it?

Second-slowest May for sales in records dating to 1988.
47th-smallest sales total for any month in over 35 years, and only 11% of all months have been slower.
39% below the average May sales pace since 1988.
In the past 12 months, 112,483 sales were 34% below average.
Lowest 12-month sales count since March 2009.
Only 2.4% of all 12-month periods have been slower.

Look, it’s been a year-plus since the Federal Reserve began hiking interest rates to cool an overheated economy. Homes have grown unaffordable as lofty mortgage rates cut buying power by 12% in a year. Economic skittishness also dampened house-hunting enthusiasm.

So in the six-county Southern California region, sales fell 26% in a year to 16,350 as the median sales price decreased 3.8% to $715,000.

The basics

Let’s look inside the L.A.-O.C. market, starting with May’s sales.

Los Angeles County had 5,154 closings, up 18% in a month and 24% lower in a year. Orange County had 2,304 sales – up 16% in a month and 22% lower in a year.

Note: An average May sees one-month sales with 6.1% growth in L.A. and 6% growth in O.C.

Next, consider how prices moved.

In Los Angeles County, the $800,000 median was flat in a month and 6% lower in a year. It’s also 7% off the $860,000 record high set in April 2022.

Orange County’s $1 million median was up 1.2% in a month but 4.8% off the $1.05 million peak of May 2022.

Since 1988, the average May had prices gain 1.1% in L.A. and 1.7% in O.C.

Payment pain

Pricier financing is a factor in the slump: The 30-year mortgage averaged 6.43% in May vs. 5.23% 12 months earlier.

My trusty spreadsheet tells me Los Angeles County buyers got an estimated house payment that’s 7% pricier – $4,016 per month on the $800,000 median vs. $3,764 on a year ago’s $854,000 home. And that assumes having $160,000 for a 20% downpayment.

In Orange County, buyers got an 8% bigger payment – $5,020 monthly on the $1 million median vs. $4,628 on a year ago’s $1.054 million home. The downpayment was $200,000 or 20%.

Single-family homes

Sales: L.A.’s 3,597 transactions were up 15% in a month and 24% lower in a year. O.C.’s 1,426 closings were up 19% in a month and 24% lower in a year.

Prices: L.A.’s $865,000 median was up 2% in a month and 7% lower in a year. O.C.’s $1.2 million median was up 4% in a month and flat in a year.

Condos

Sales: L.A. had 1,263 sold — up 25% in a month but 26% lower in a year. O.C. had 714 sold — up 24% in a month but 18% lower in a year.

Prices: L.A.’s $666,000 median was up 1% in a month but 5% lower in a year. O.C.’s $724,000 median was down 1% in a month but 3% lower in a year.

New homes

Sales: L.A. builders sold 206 units — up 26% in a month but 27% lower in a year. O.C. had 163 new residences sold — down 19% in a month and 25% lower in a year.

Prices: L.A.’s $858,500 new-home median was down 13.3% in a month but 6% higher in a year. O.C.’s $1 million median was down 12% in a month and 24% lower in a year.

Builder share: L.A. new homes were 4% of all closings last month compared to 4.2% 12 months earlier. O.C.’s 7.1% share last month compares to 7.3% 12 months earlier.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]

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