The housing market in Los Angeles and Orange counties experienced a significant slowdown in July due to soaring mortgage rates and persistently high prices. According to CoreLogic, a total of 6,496 houses and condos were purchased in the two counties, marking a 14% decrease from the previous month and an 18% decrease from the same period last year. These figures make July 2023 the slowest-selling July on record. In fact, it ranks as the 19th-smallest sales total for any month in the past 35 years, with only 4% of all months having slower sales. Additionally, the sales pace for July 2023 was 46% below the average since 1988, and the past 12 months saw the lowest number of sales ever recorded.
The slowdown in house hunting can be attributed to both the impact of high mortgage rates, which reduced buying power by 14%, and a limited supply of available homes. Across the six-county Southern California region, sales dropped by 19% in a year to a total of 13,998.
Furthermore, housing affordability was affected by increasing prices. The median sales price for the six-county region rose by 2.5% to $743,000, just 1% below the record set in April 2022 ($750,000).
The State of the LA-OC Market
In July, the LA market had 4,418 closings, representing a 16% decrease from the previous month and a 21% decrease from the same period last year. In OC, there were 2,078 sales, indicating a 10% decrease from the previous month and a 9% decrease from the same period last year.
In terms of prices, LA’s median price remained flat at $830,000 for the month, and was 1% lower compared to the previous year. However, it was 3% lower than the record set in April 2022 ($860,000). On the other hand, OC’s median price increased by 1.5% to $1.075 million for the month and was 8% higher compared to the previous year, setting a new record high ($1.059 million) in June 2023.
Impact of Mortgage Rates
The rise in mortgage rates significantly impacted the cost of homebuying. In July, the average 30-year mortgage rate was 6.84%, compared to 5.41% in the previous year.
For example, in LA, buyers faced a 16% increase in estimated monthly house payments. The median price of $830,000 resulted in a monthly payment of $4,346, assuming a 20% downpayment of $166,000. This is higher than the monthly payment of $3,755 for a $835,000 home in the previous year. Similarly, OC buyers experienced a 25% increase in monthly payments. The median price of $1.075 million led to a monthly payment of $5,629, assuming a 20% downpayment of $215,000. This is higher than the monthly payment of $4,497 for a $1 million home in the previous year.
Single-Family Homes
Sales: In LA, there were 3,185 transactions, marking a 16% decrease from the previous month and an 18% decrease from the same period last year. In OC, there were 1,326 closings, indicating an 11% decrease from the previous month and an 8% decrease from the same period last year.
Prices: In LA, the median price remained flat at $899,000 for the month but increased by 1% compared to the previous year. In OC, the median price increased by 3% to $1.24 million for the month and was 9% higher compared to the previous year.
Condos
Sales: In LA, 1,051 condos were sold, marking a 16% decrease from the previous month and a 24% decrease from the same period last year. In OC, there were 618 sales, indicating a 2% decrease from the previous month and a 4% decrease from the same period last year.
Prices: In LA, the median price remained flat at $685,000 for the month and the year. In OC, the median price increased by 2% to $762,500 for the month and was 8% higher compared to the previous year.
New Homes
Sales: In LA, there were 98 new home sales, marking a 36% decrease from the previous month and a 63% decrease from the same period last year. In OC, there were 133 new residences sold, indicating a 23% decrease from the previous month and a 27% decrease from the same period last year.
Prices: In LA, the median price for new homes decreased by 8% to $837,500 for the month and was 9% lower compared to the previous year. In OC, the median price increased by 8% to $1.25 million for the month but was 21% lower compared to the previous year.
Builder Share: In LA, newly built residences accounted for 2.2% of all closings in the last month, compared to 4.8% in the previous year. In OC, builders had a 6.4% share of the month’s closings, compared to 8% in the previous year.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]
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