Home sales hit lows not seen since the COVID-19 lockdown, Great Recession.
According to a new report from the California Association of Realtors (CAR) released on Monday, home sales plunged by nearly 21% in the state last month, hitting sales levels not seen since the COVID-19 pandemic lockdown and the Great Recession, and signaling a massive cooldown in the housing market.
This article was written by Evan Symon and originally published by the California Globe.
Last month, the median California home price stood at $863,790, decreasing significantly from the May high of $900,170. However prices didn’t matter when it came to price segment sales changes, with every major group, from the low $0-$290,000 range to the high $2,000,000+ range, seeing large decreases in sales in June. The overall 20.9% drop was also the largest drop in sales compared to figures where they were a year prior since May 2020 when California was in the heart of the COVID-19 lockdown. Excluding the lockdown, a drop had not been that low since April 2008 during the housing bubble burst in the midst of the Great Recession.
While some regions still have higher overall prices when compared to a year ago, with the counties of Southern California being at an average price of $750,000 in June in contrast to $679,000 in June 2021, declines in sales have been increasing. Despite COVID concerns fading away, the massive reduction in home sales have instead been spurred by inflation concerns, climbing interest rates, more buyers being patient when it comes price reductions, and an increasing number of new homes on the market without buyers.
“With inflation remaining high and interest rates expected to climb further in the coming months, the market will normalize further in the second half of the year, with softer sales and more moderate price growth,” said CAR Chief Economist Jordan Levine in a statement on Monday.
Homes sales expected to continue to decline amid inflation, recession worries
However, many experts predict that prices and sales will continue to go down for the next year or two with higher inflation costs and a declining number of new home buyers.
“The lockdowns held back home buyers for months,” Wendy Rodriguez, a Realtor in Southern California, told the Globe on Tuesday. “So we saw a wave come in afterwards and it didn’t let up for some time.
“A Lot of millennials also came of age around that time to really buy a home and start a family. Add to that baby boomers refusing to move and sell their homes at numbers seen in previous generations, good rates, and a major want to get out of small rental areas after the lockdown, and we saw a rush.”
“It looks like we hit that peak and are starting to come back to Earth now. A lot of Millennials and Gen Z people want to buy homes still, but the ball is now in their court. Many have been turned off by inflation and recession fears, but many looking to sell their homes are also no longer seeing anyone interested for such high prices. People who had their homes down as their retirement fund are now getting antsy. They saw what happened ten years ago when people who tried that had to sell at way lower amounts and forced many in their 60s, 70s and even 80s to rejoin the workforce. But they no longer have a booming housing market on their side.”
“This is good news for younger people who have been annoyed for years by not seeing anything affordable on the market, but it also means a lot of people will have to sell their homes for far less than they were expecting.”
Many predict that the declines in the housing market nationwide are likely to continue the downward trend in the coming months.