New data by CoreLogic shows a total of 15,781 new and existing houses and condos were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in December 2018. This number is down 8.2 percent month-over-month from 17,192 sales in November 2018,* and down 20.3 percent year-over-year from 19,800 sales in December 2017. Total Southern California home sales in December were the lowest for that month since December 2007, when 13,240 homes were sold.
Sales have fallen on a year-over-year basis for the last five consecutive months and in seven of the last eight months.
Since 1988, the average change in sales between November and December is an increase of 12.3 percent. December sales have ranged from a low of 13,240 in 2007 to a high of 36,865 in 2003. December 2018 sales were 32.7 percent below the December average of 23,445 sales.
December sales of newly-built homes remained much lower than the long-term average, while resales were closer to their historical average. In December 2018, sales of newly-built homes (detached houses and condos combined) were 53.8 percent below the December average since 1988, while December 2018 resales (detached houses and condos combined) were 28.4 percent below the long-term December average. Ignoring the 2003-2006 housing boom that was fueled by risky home loans, December 2018 resales were 25.4 percent below the sales average for December.
“Last month’s sharp drop in home sales stands out in several ways,” says Andrew LePage, a CoreLogic analyst. “The number of homes sold was the lowest for any December in 11 years, since the onset of the last housing downturn in 2007. Sales fell about 8 percent between last November and December, whereas they normally rise significantly between those months. Additionally, the 20 percent annual decline in December sales was the largest for any month in more than eight years. This drop in activity reflects a variety of factors. Mortgage rates hit a 2018 high in November, affecting December closings, and stock market volatility created an additional headwind in high-end markets. Meanwhile, some would-be buyers remain priced out or unwilling to buy amid concerns that prices have overshot a sustainable level.”
The median price paid for all Southern California homes sold in December 2018 was $515,000, down 1.5 percent month over month from $523,000 in November 2018 and up 1.1 percent year over year from $509,500 in December 2017.
Since 1988, the average change in the median sale price between November and December has been an increase of 0.6 percent. December 2018 marked the 81st consecutive month in which Southern California experienced a year-over-year increase in the median sale price. Southern California’s median sale price hit an all-time high of $537,000 in June 2018. When adjusted for inflation, the December 2018 median remained 13.2 percent below its peak in July 2007.
“The roughly 1 percent annual increase in Southern California’s median sale price last month marked the lowest such gain in the uninterrupted string of year-over-year increases each month that began in April 2012,” LePage says. “The median’s annual increases have declined over the past year as home sales slowed and inventory rose. The median’s tiny annual gain last month also reflects a shift in market mix, where higher-end sales represented a slightly lower share of all activity compared with December 2017.”
The number of homes sold for $500,000 or more in December 2018 fell 19.3 percent compared with December 2017. Sales of $800,000-plus homes fell 18.6 percent year-over-year, and $1 million-plus sales fell 18.2 percent. Compared with December 2017, sales below $500,000 fell 22.9 percent year-over-year, while sales below $300,000 decreased 26.2 percent and sales below $200,000 dropped 29 percent. Homes sold for $500,000 or more accounted for 52.6 percent of all sales in December 2018, down from 54.2 percent in November 2018 and up from 51.4 percent in December 2017.
Additional Southern California Highlights for December 2018:
- Absentee buyers—mostly investors and some vacation homebuyers—bought 22.8 percent of all homes sold in December 2018. This is up from 21.2 percent in November and down from 23.5 percent in December 2017. The absentee share peaked at 32.2 percent in February 2013, and the monthly average since 2000 has been about 20 percent.
- Adjustable-rate mortgages (ARMs) made up 12.9 percent of the number of purchase loans used to buy homes in Southern California in December. This is up from 12.3 percent in November and up from 11 percent in December 2017. ARMs, which offer lower initial interest rates and monthly payments compared with fixed-rate mortgages, are more common in the middle and high-end of the market where the impact on monthly payments is larger. In December 2018, the median price paid for Southern California homes purchased with ARMs was $835,000, compared with a median of $515,000 for all homes purchased. The ARM share ranged from 5.9 percent of purchase loans in Riverside County to 22.8 percent in Orange County.
- Jumbo mortgages accounted for 15.9 percent of the total number of home purchase loans used in Southern California in December 2018, up from 15.7 percent in November 2018, and down from 17.3 percent in December 2017. Jumbo loans represented 33.6 percent of the total dollar volume of all home purchase originations in December, up from 33.3 percent in November 2018 and down from 35.3 percent in December 2017. Jumbo loans are those that exceed the “conforming loan limit,” which is regulated and varies by county. Nationally, the base conforming loan limit for single-family homes in 2018 was $453,100, up from $424,100 in 2017. High-cost counties, including San Diego, Orange, Los Angeles and Ventura, had higher limits of up to $679,650, compared with $636,150 in 2017. A rise in the jumbo loan share of purchase loans can be related to higher home prices, an increase in the portion of sales occurring in the market’s high end or greater availability of funding for jumbo loans.
- Real estate-owned (REO) sales represented 1.3 percent of total Southern California home sales in December, up from 1.2 percent in November 2018 and down from 1.4 percent in December 2017. REOs are foreclosed homes that lenders then sold on the open market.
*When necessary, November 2018 data was revised. Revisions are standard, and to ensure accuracy CoreLogic incorporates newly released data to provide updated results.
For more information, please visit www.corelogic.com.
