Some areas of Southern California's housing market are starting to feel the pinch from rising interest rates, particularly in such upscale communities as Bel-Air, Westwood and Pasadena, where median home prices in some ZIP codes have dropped 15 percent to 20 percent from a year ago.
Many real estate agents and brokers have long predicted that a slowdown in the housing market would first hit homes that sell for between $2 million to $3 million a sweet spot in the market for well-heeled families trading up from existing homes. And the June numbers show that trend popping up in some locales, although it's not widespread.
"The slowdown in sales appears to be most noticeable in the move-up category," said Marshall Prentice, president of DataQuick Information Systems. "Prices are flattening out in that market. Entry-level and mid-market homes are not seeing as much of a sales slowdown, and prices are still going up, though at a slower pace."
Indeed, brokers and mortgage lenders tend to dismiss any suggestion that Los Angeles' housing market is slowing dramatically. Instead, they say that after four years in which sellers have had the advantage, prices are readjusting to normal levels.
"There's a much more even playing field now for buyers and sellers," said Jerry Jolton, estates director of the Beverly Hills office of Coldwell Banker. "The market is adjusting and usually sellers are about six months behind the curve because they look at their neighbor who may have sold last year at a higher price."
The housing data, provided to the Business Journal by HomeData Corp., a Melville, N.Y.-company that tracks housing prices nationwide, indicates that rising interest rates appear to be having a modest impact.
The median price of an existing home that sold in June in Los Angeles County was $555,000, which is 11 percent greater than a year ago in June. Prices rose less than 1 percent from the previous month, however. The median price in May was $550,000.
Indeed, homes are appreciating in value at their slowest pace in almost six years. The slower pace has been expected for months because last year home prices in Southern California were appreciating 20 percent or more every month, a level that was clearly unsustainable.
Beyond the price, housing experts pay attention to the number of homes sold that is, the volume as a good indicator of whether the housing market still has momentum. In a decelerating environment, the volume tends to drop before prices drop.
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