Sales of both new and existing homes and condominiums plummeted by 18% in September 2018 compared with sales figures in September 2017, according to CoreLogic. To make matters worse, luxury sales fell by 26%, according to a report by Pacific Union International.
New home sales suffered the most. New home sales were down -47% below September averages that date back to 1988 while sales of existing homes were -22% below long-term averages, according to CoreLogic.
Sales have been falling on an annual basis for much of the year but this drop is the biggest annual drop for any month in almost 8 years. It is the lowest September pace of sales since 2007 and twice the annual drop seen in August 2018.
The median home price in September 2018 was $505,000, still +3.6% higher than in September 2017, but the lowest annual gain for any month in more than three years.
Despite eyebrow raising drops in the sales volume of luxury properties, median home prices for luxury properties increased in September 2018. Median home prices in Beverly Hills, Holmby Hills and Bel-Air increased by +18%; West Los Angeles saw a +14% increase in median home prices and the Hollywood Hills saw a +3% increase. Malibu was the only place where luxury median prices dropped. -8%.
The reasons for such drops in sales volume in Southern California may be different for luxury buyers than for moderate – medium priced buyers. For moderate to medium priced would-be buyers, Andrew LePage, an analyst with CoreLogic, said, “The double whammy of higher prices and rising mortgage rates has priced out some would-be buyers and prompted others to take a wait-and-see stance,”
For luxury would-be buyers, Selma Hepp, chief economist and vice president of business intelligence with Pacific Union International, said, “Compared with last year, there is a little more inventory so buyers can take longer and be pickier. Also, the summer of volatility in the financial markets and trade concerns has taken the breath away from luxury buyers. Again, they are now taking longer to commit to buying a home…they have taken a pause to see how things play out.”
