Encouraging Trends in Home Prices
The Southern California housing market is evolving, presenting potential opportunities for buyers and sellers alike. According to Zillow, the average home price in the six-county region was $869,288 in November. While this marks a modest 0.3% dip from October and the fourth consecutive month of slight declines, prices remain robust and higher than the previous year.
“Buyers are taking their time,” noted Mark Schlosser, a Compass agent in Los Angeles. “This allows for more thoughtful decisions in a market that’s balancing itself.”
Although prices are 1.3% below their peak in July, experts emphasize that significant price drops are unlikely. Seasonal adjustments and strong underlying market fundamentals contribute to this stability.
Balanced Supply and Demand
The housing market is experiencing a healthy adjustment, with more inventory becoming available and high mortgage rates tempering demand. While annual price growth slowed to 4.3% in November from a peak of 9.5% in April, this trend reflects a market gradually normalizing rather than declining.
Orphe Divounguy, a senior economist at Zillow, remains optimistic about the future. “Annual price growth may slow further, but we’re unlikely to see negative trends,” he said. California’s enduring demand and limited housing supply continue to support prices, even as other regions with rapid construction, like Austin, Texas, experience minor declines.
Positive Projections for 2025
Looking ahead, Zillow forecasts that home prices in Los Angeles and Orange counties will rise by 1.5% by November 2025, with the Inland Empire seeing an anticipated increase of 2.7%. This projected growth offers a positive outlook for homeowners and investors, especially as the market stabilizes further.
The Impact of Mortgage Rates
Mortgage rates, a key factor in housing affordability, have shown resilience. After reaching over 7% in May, rates declined to 6.08% by September before briefly rising again. As of mid-December, rates are at 6.6%, providing a more favorable environment for prospective buyers.
Sam Khater, chief economist at Freddie Mac, remarked, “While challenges remain, the market is gradually becoming more accessible, paving the way for improved affordability.”
A Bright Future for Southern California Housing
Despite the current slowdown, the Southern California housing market is demonstrating resilience and balance. For buyers, the increased inventory provides more options, while steady price growth assures sellers of long-term value. High demand and limited supply underpin the market’s strength, setting the stage for a promising 2025.
As the region navigates these shifts, collaboration between policymakers, builders, and communities will be key to addressing affordability challenges and meeting demand. The future holds exciting possibilities for a more dynamic and accessible housing market in Southern California.