Housing hot streak cools as some buyers balk at sky-high prices

Southern California homebuyers took their feet “off the gas pedal” last month, causing the region’s white-hot housing market to level off after six months of record-setting price gains.

The median price of a Southern California home, or the price at the midpoint of all sales, was $680,000 in August, down $1,000 from July, DQ News/CoreLogic reported Monday, Sept. 20. There also were 541 fewer homes sold last month than in July, a decrease of 2.2%.

Homes now are taking a bit longer to find a buyer and bidding wars are less intense with fewer offers, agents say. The supply of homes for sale also has ticked up steadily over the past few months, giving buyers more selection and less incentive to bid higher and higher for desired homes.

“The real estate market right now is cooling down a little bit compared to a few months ago because there’s more houses for sale and … the buyers are more cautious,” said Lily Campbell, an agent with First Team Real Estate in Irvine.

Nonetheless, home prices are still ski high.

The six-county median was up $83,000 — or 13.9% — from August 2020, DQ News/CoreLogic figures show. That’s an average gain of almost $1,600 every week for the past year.

Sales, too, edged up 8.1% from August 2020 levels. That’s a comparatively small gain after a year of increases ranging from 17% to 96%.

At 24,565 sales, last month’s total also was the smallest for an August since 2006.

More sellers are reducing their asking prices, Zillow reported. Homes selling below the asking prices increased 10.7% in Los Angeles and Orange counties and by 10.3% in Riverside and San Bernardino counties.

“There is probably some buyer fatigue in the market evident by lower sales-to-list (price) ratios and fewer offers for homes on the market,” said Selma Hepp, CoreLogic’s deputy chief economist.

The traditional summer slowdown and more inventory also contributed to the August cool down.

The number of Southern California homes for sale has been ticking upward steadily since February, rising 18% to 42,756 homes for sale last month, Zillow figures show.

“Another month of rising for-sale inventory gives shoppers more options to choose from and less competition,” said Nicole Bachaud, economic data analyst at Zillow. That, in turn, “should help reduce bidding wars and further moderate rampant price hikes.”

Agents across the region have been seeing this trend for two months.

“Three months ago, they would buy no matter what. No matter the condition (of the home), no matter the price,” said real estate broker Harma Hartouni of Keller Williams Encino-Sherman Oaks. “Now, they’re more cautious about what they’re getting.”

Homes that are priced too aggressively are sitting on the market longer, added Susan Stone, a broker associate at Beverly and Company Luxury Properties in Sherman Oaks.

“There are fewer bidding wars,” Stone said. “Prices are leveling off. They’re not going up like they were before.”

Southern California’s housing cool-down reflects trends occurring nationally, Zillow reports. Forty-three of the nation’s 50 largest metros saw home-price appreciation slow down in August, compared with 20 in July.

“A slightly less frenzied market means buyers have a much better chance to land the home they’re bidding on,” Zillow’s Bauchaud said. “But keep in mind the market is still much hotter than normal for this time of year.”

And while there’s fewer bidding wars, they’re still occurring.

Stone listed a small, one story house in a desirable Woodland Hills neighborhood for $795,000 in July that ended up selling for $875,000 last month after getting eight offers. A 70-year-old three-bedroom house in Monrovia that listed for $899,000 closed last month for $1 million following another bidding war.

“In the San Gabriel Valley, it’s still pretty hot,” said listing agent Cheryle Johnson of Coldwell Banker Dynasty in Temple City.

San Bernardino and Ventura counties also seemed less affected by last month’s slowdown. Prices in both areas hit record highs.

Here’s breakdown by county showing year-over-year gains in medians and sales:

— Los Angeles County’s median rose 13.4% to $785,000; sales were up 14.3% to 7,799 transactions.

— Orange County’s median rose 12.5% to $900,000; sales were up 4.5% to 3,708 transactions.

— Riverside County’s median rose 19.3% to $525,000; sales were up 6.4% to 4,271 transactions.

— San Bernardino County’s median rose 22.4% to an all-time high of $465,000; sales were up 9.2% to 3,409 transactions.

— San Diego County’s median rose 13.3% to $725,000; sales were up 3.5% to 4,267 transactions.

— Ventura County’s median rose 14.8% to an all-time high of $740,250; sales were up 1.3% to 1,111 transactions.

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