Home sales in Southern California have been rising since May. But as of the week ending Aug. 29 — in which buyers signed contracts for 3,770 properties — home sales were rising so quickly that they were outpacing available inventory. 3,770 new escrows represents a 0.7 percent rise week-over-week, and a 6 percent rise year-over-year.
By contrast, the 25,800 homes on the market in Los Angeles and Orange counties represents a 34 percent decline year-over-year in inventory. More dramatically, in the Inland Empire, total inventory stands at 8,493 — a 47 percent decline year-over-year.
Negotiations have also been moving more rapidly. Houses in Los Angeles and Orange counties have taken, on average, 12.5 days to go into escrow — a 9.5-day reduction from the same time last year.
Paradoxically, home prices in Southern California have risen considerably. The median price in Los Angeles and Orange counties as of Aug. 29, $971,000, was up 14 percent from the same week last year, and up from $670,000 in July. Likewise, in San Bernardino and Riverside counties, the median home price rose 13 percent year-over-year to $474,500.
Unemployment rates have also remained high — at 15.9 percent, July unemployment in Southern California was higher than it was even at the peak of the Great Recession.
But counteracting rising prices and joblessness is an ever-plummeting 30-year fixed mortgage rate. In July, a national Freddie Mac survey set the average rate at 2.98 percent — the first time it had dipped below 3 percent since Freddie Mac started publishing the data. Record-low rates immediately precipitated a national jump in homebuying as, amid economic uncertainty, buyers saw opportunity.
Experts suggest that COVID-19 has caused millennials, who until recently had favored renting in bustling urban environments (and also having cash on hand), to reconsider the value of homeownership in spacious suburbs. Having been spooked into saving by the Great Recession, many millennials now stand to become first-time homeowners.