Southern California’s 6-county region hit a single-family median sale price of $697,500 in 2021.
2021 Home Prices in Southern California Hit All-Time Highs
The single-family median sale price in Southern California increased +16.3% in December to a record high of $697,500. In fact, December’s median sale price was the tenth time this median price broke records throughout the year.
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Home Sales & Price Figures by Each County in Southern California
- Los Angeles County – Median home price increase of +15% y/y at $805,000. Sales volume down -5.8%
- Orange County – Median home price increase of +17.6% y/y oat$935,000. Sales volume down -17.5%
- Riverside County – Median home price increase of +20.4% y/y at $550,000. Sales volume down -7.7%
- San Bernardino County – Median home price increase of +21.4% y/y at $485,750. Sales volume down -10%
- San Diego County – Median home price increase of +15.2% y/y at $743,000. Sales volume down -11.5%.
- Ventura County – Median home price increase of +15.5% y/y at $751,000. Sales volume down -23.1%
According to Redfin data on Los Angeles County, 59.7% of all offers had competing offers.
Driving Factors and Players in Southern California Buying Frenzy
Drivers of the Southern California home buying fiesta in 2021 were similar to home buying players and factors in other parts of the country:
- rock-bottom inventory
- low mortgage interest rates (now rising)
- first-time and/or Millennial buyers,
- older Millennial buyers looking to “move-up” to larger, more expensive homes,
- buyers of all demographics wanting more living space
- investor/landlord buyers
Real estate agents and economists point the biggest finger at supply shortages. Such shortages are primarily due to two factors: the decade-long underbuilding of new homes that will take years to “catch up” to demand and homeowners with locked-in low mortgage rates who do not want to move in this highly competitive, costly housing market.
This factor of rock-bottom inventory cannot be overemphasized. According to a recent report from Zillow, there were nearly -30% fewer homes on the for-sale market in Los Angeles and Orange County in December 2021 than there were in December 2020.
What’s Down the Road in Southern California
Like everywhere, Southern California home buyers are already feeling the pinch of 7% inflation and rising interest rates. Just this last week the average rate on a 30-year fixed mortgage hit 3.56%, up from 3.22% two weeks prior, according to Freddie Mac. (As of last week, interest rates hit 3.72%.)
The more interest rates rise, the less buyers can afford, particularly first-time home buyers. DQNews pointed out that Southern California home sales dropped -10% y/y (as you can see in the above county breakdown) and that may have been due to first-time buyers being priced out of the market.
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All industry experts anticipate that price increases in Southern California (and elsewhere in the nation) will slow down due to issues of affordability however, Selma Hepp, an economist with CoreLogic, said that without inventory increases in 2022, “We may instead see the extension of this double-digit rate.”
Thanks to the California Association of Realtors and The Los Angeles Times.