Price increases for October Southern California residential sales have dropped from double digit year-over-year gains to only single digit gains for the past five months.
The latest reports show a 6.8 percent year-on-year gain in the median Southern California home sale price.
However prices are still almost 20 percent below the peak $505,000 median sales price achieved in the Spring/Summer of 2007.
The median price paid for all new and resale homes and condos sold in October in Southern California actually slipped down a little over one-half percent from the preceding month.
This sales decline from September was not unusual. On average, Southern California sales have fallen 0.3 percent between September and October according to Dataquick services since this reporting data became available.
Traditional buyers are still not jumping into the market to make up the void left by the dramatic exit of investor and “all-cash” buyers that began about the Spring of last year.
Many prospective buyers are still struggling with affordability issues and a still stringent mortgage market. Most buyers are feeling that the market has gotten too pricey, too fast, and out of reach financially.
In the global market, luxury prices (defined as the top 5 percent in each city included in the survey) rose just 0.2 percent over the July to September period.
Political and economic key events are considered to have contributed to the minimal rise in prices including cooling measures in certain Asian cities and negative economic indicators in Europe.
Bucking the downtrend globally were Tokyo, Capetown, and San Francisco with prices rising 9.2 percent, 6.3 percent, and 4.5 percent respectively.
While the global luxury real estate market has slowed, the luxury Westside L.A. market which draws from the entertainment industry crowd and the San Francisco market has been showing resilience, bucking the trend.
The expectation by industry analysts generally is not for lower prices, just gains that are more moderate. The 12-month year over year price gain of about 28 percent that was seen last year in 2013 made buyers nervous that prices had gone up too quickly. Now buyers are more cautious.
The well-respected UCLA Anderson School of Business forecast explains, “The California economy is moving forward in an expansion from the depths of the Great Recession. But, even though the number of jobs is now higher than any time in the past, the state remains below its potential in output and employment.” The report goes to note, “how painfully plodding this recovery process has been.”
Southland home sales sold at the slowest pace for the month of October in three years as sales to investors and cash buyers continued to run well below October 2013 sales. However, the Anderson School of Business expects prices to continue to rise in response to new household formation.
For a free courtesy consultation, contact Bess Hochman, a top Westside Real Estate Broker for more than 20 years. Bess is also distinguished by holding a law degree. This article expresses the opinion of the author. You are advised to consult attorneys and others experts specializing in the issues referenced in this article. Contact Bess by phone at 310.291.4111 or email Bess.CenturyCityNews@yahoo.com.
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