Southern California’s housing market, encompassing Los Angeles, San Bernardino, San Diego, Santa Barbara, and San Jose, has seen a notable uptick in home prices. Following a decline in the latter half of 2022, the average home price in this six-county region was $831,080 as of October, marking a 0.12% increase from the previous month, as per Zillow data. This rise is attributed to an ongoing increase in mortgage rates which, after more than doubling, reduced buyer purchasing power. However, the market rebounded in spring, driven by a critical shortage of homes due to current homeowners opting to retain their low-interest mortgages rather than face higher rates.
Market Dynamics: Supply Shortages and Shifting Buyer Sentiments
The supply-demand imbalance has escalated home prices, although the pace of growth is slower compared to the pandemic boom. Real estate agents report a resurgence of interest, particularly among first-time buyers unaffected by existing mortgages. However, high mortgage rates continue to challenge the market. As of August, rates had surpassed 7%, and fluctuations in these rates will significantly influence future market trends.
Rental Market Variations Across California Cities
The rental market exhibits a different trend. While the median rental price in San Jose has risen by 1%, other major cities like Los Angeles, San Bernardino, Sacramento, San Diego, and San Francisco have seen decreases. Despite these declines, California’s rental costs remain high, with the median rent for apartments at $2,116, significantly above the national average.
