Southern California homes selling near record-high prices, who is still buying?
While the median sales price of a home in Southern California hovered near record highs last month, sales began to pick up as mortgage rates remained low.
New data released by CoreLogic on Wednesday showed that the median price paid for all homes in Southern California last month was $540,000 – an increase of nearly 2 percent from the same time last year. The median price is down marginally from June’s record high of $541,750.
The median sale price of a home in the U.S. in the second quarter was $320,300, according to the U.S. Census Bureau.
Despite the higher prices, total home sales increased 6.1 percent from the month prior and 3.7 percent from the same period last year. That’s the first year-over-year sales increase for any month since July 2018. Nevertheless, sales of newly-built homes were well below the long-term average, while resales were near the historical average.
The slight increase in Southern California home sales was boosted by lower mortgage rates, a healthy labor market and a bump in inventory.
“While the July median sale price was up nearly 2 percent year over year, the principal-and-interest mortgage payment on median-priced homes was down nearly 7 percent due to a roughly 0.7 percentage point drop in mortgage rates,” Andrew LePage, a CoreLogic analyst, said in a statement.
Who is Buying?
More than one-in-five homes sold went to absentee buyers, or vacation home buyers and investors.
And homes were snapped up by wealthier residents.
The majority of the increase in homes sold came at the upper-end of the spectrum – homes sold for $500,000 or more rose 7.1 percent – accounting for more than 56 percent of all sales last month. Sales below $200,000 dropped nearly 15 percent.
Meanwhile, California is one of the high-tax states seeing an outflow of residents after state and local tax deductions were capped at $10,000 under the Tax Cuts and Jobs Act. Last year, the state had more domestic outmovers than any other, at 661,026. It lost the most residents to Texas, Arizona and Washington – two of which have no state income tax.
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California is home to nine out of the top 15 most expensive metro areas in the country, according to new data from the Tax Foundation. Those cities include Los Angeles, Ventura, San Diego, as well as others in the northern part of the state such as Santa Rosa and San Francisco.
Home prices rose 5 percent year over year in Los Angeles and 4.6 percent in San Bernardino.