“Numerology” tries to find reality within various measurements of economic and real estate trends.
Buzz: Ghosts may be easier to find than Southern California house hunters willing to pay full price these days, but the latest price weakness isn’t just a typical fall blip.
Source: My trusty spreadsheet checked the month-over-month price changes in Southern California’s median sales price for all residences including single-family homes and condos, both existing and new, using 1988 CoreLogic data.
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Fuzzy math: The median of the six regions fell by 1.4% in September. And yes, it is a historically “down” month for prices. However, the median has only fallen by an average of 0.5% in a typical September over the past 34 years.
Careful monthly home price fluctuations require subtle dissections, such as comparisons to historical norms.
Let’s think about the results of September 2022 vs. typical month change from August, by county, dating back to 1988. All but San Bernardino underperformed.
Along the coast, Los Angeles County was down 2.3% in September vs. an average decrease of 0.5%.
Orange County fell 3.5% in September vs. an average decrease of 0.7%.
San Diego County fell 0.6% in September vs. an average decrease of 0.2%.
And Ventura County fell 2.2% in September, compared to an average decline of 1.1%.
It was a little less spooky in the Inland Empire, where Riverside fell 0.9% in September versus an average gain of 0.5%. San Bernardino rose 1.8% in September, compared to the historical average gain of 0.4%.
The dirty truth
Look, when it comes to price movement, there are only two Southern California home buying seasons: uphill (March to August) and downhill (September to February).
The first signal of the current weakening of the market was just how weak the local bullish period was this year. Since 1998, the March-August average of the six districts has increased by 7%. However, the price only increased by 3% in the “uphill” season of 2022.
Now the region faces a “down” period from September to February, with prices falling by an average of 3% over the six months.
The same story is true in all six counties…
Los Angeles: 3% gain in March to August 2022 vs. 8% average gain. September to February has an average drop of 3%.
Orange: apartment in March to August 2022 vs. an average increase of 6%. September to February has an average drop of 2%.
Riverside: 1% increase in March to August 2022 compared to 4% average increase. September to February has an average drop of 1%.
San Bernardino: 2% increase in March to August 2022 compared to 5% average increase. September to February has an average drop of 1%.
San Diego: 3% increase in March to August 2022 compared to 6% average increase. September to February has an average drop of 2%.
Ventura: 3% increase in March to August 2022 against 8% average increase. September to February has an average drop of 3%.
So the Southern California market is now in a six-month period of long-term price headwinds.
And yes, some seasonal decline is expected. But history ominously suggests that this six-month “downhill” period is off to a rough start.
The six-county median September loss of 1.4% equals half of the average 2.8% decline in prices from September to February since 1988.
September losses in Orange and Riverside counties were larger than the average total declines for the entire six-month “downhill” season.
And Los Angeles County’s one-month decline was 85% of historic six-month losses, while Ventura County’s was 73% and San Diego County’s 37%.
The clear outlier was San Bernardino County’s profit for the month.
It’s certainly a scary time for housing.
Jonathan Lansner is a business columnist for the Southern California News Group. He can be reached at [email protected]