“How expensive?” tracks measurements of California’s totally unaffordable housing market.
The pain: Yes, California, there’s a new record high for the median sales price for existing, single-family houses.
The source: My trusty spreadsheet reviewed May’s homebuying report from the California Association of Realtors, which includes data dating to 1990, to try to make sense of the continuing upswing.
The pinch
The typical California homebuyer paid $908,040 in May, up 9% in a year and 56% above the 2018-19 average price.
It was the second consecutive month for a record high. The previous peaks were set in March, April and May 2022.
Pressure points
Who can afford these prices, especially considering mortgage rates remain elevated in the 7% ballpark?
Not many people. Look, by my math, California’s top wages buy only 61% of the typical home.
So consider that statewide sales ran at a 272,410 annual rate in may. Not only is that down 6% in a year, just 6% of all months had a slower buying pace since 1990.
Or look at buyer reluctance this way: May sales were 32% below the 2018-19 average.
Do not forget that in March 2022 the Federal Reserve began raising interest rates to battle an overheated economy. Those moves essentially doubled mortgage rates – and iced homebuying.
Note that the last time the California sales pace topped 300,000 was September 2022. So this is the 20th consecutive month below the threshold. Previously, there had only been 36 months below the 300,000 pace going back to 1990.
So why do house prices stay firm? One reason is the limited options for the house hunters who are brave enough (and wealthy enough) to scour the market.
May had 2.6 months worth of listings inventory. That’s down 24% in a year, and only 14% of all months since 1990 have had thinner supply. May’s listings were 24% below the 2018-19 average.
As a result of this tight market and an odd urgency to buy, house hunters have acted quickly.
The typical California house was on the market for just 16 days on market in May. That’s down 1 day in a year, with only 8% of all months since 1990 having a quicker sales speed. May’s days on market is seven days below the 2018-19 average.
Quotable
“With mortgage rates coming back down from their recent peaks and market competition heating up, the statewide median price may have more room to grow before the summer ends,” says the association’s chief economist Jordan Levine.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]