Southern California home prices fell in November, marking the fifth time in six months that prices declined amid a broad slowdown in the housing market.
The six-county region’s typical home price dropped 0.9% from October to $815,911 last month, according to data released Monday by Zillow.
The typical price — which Zillow defines as roughly the average of the middle third of the market — is now 6.3% below the peak reached in May.
Home values are broadly falling for the first time in a decade because borrowing costs have exploded this year and priced many people out of the market.
Mortgage interest rates have more than doubled to the mid-6% range, a result of high inflation and the Federal Reserve’s attempts to fight it.
In individual Southern California counties, home price declines from the peak range from a 3.5% drop in San Bernardino County to an 8.6% drop in Orange County.
In Los Angeles County, prices are down 7%.
The declines aren’t enough to offset the rise in borrowing costs, even though mortgage rates have come down from recent highs of just over 7%.
For example, if in November someone bought the typical priced home in L.A. County, and received the prevailing mortgage rate of 6.5%, their monthly payment would still be $360 more than if they bought the typical priced home at May’s peak since rates were lower then, according to a Zillow analysis that assumed 20% down in both cases.
Given strong demand in early 2022 — before rates jumped — home prices are also higher than this time last year. That, along with higher mortgage rates, means housing is much more expensive compared with winter 2021.
Many analysts expect home prices will keep falling in 2023.
If values decline enough, it could eventually offset the rise in borrowing costs, though the exact trajectory of prices depends on several factors, including the direction of mortgage rates and if the Fed’s actions to fight inflation push the country into recession.
Here is how home prices changed last month in each of the six Southern California counties.
- In Los Angeles County, the typical home price fell 0.5% from October to $842,752 last month. Prices are now 6.3% lower than the county’s peak reached in May.
- In Orange County, the typical home price fell 3.4% from October to $1,014,194 last month. Prices are now 8.6% lower than the county’s peak reached in May.
- In Riverside County, the typical home price fell 0.5% from October to $599,428 last month. Prices are now 4.6% lower than the county’s peak reached in June.
- In San Bernardino County, the typical home price fell 0.6% from October to $523,830 last month. Prices are now 3.5% lower than the county’s peak reached in June.
- In San Diego County, the typical home price rose 0.1% from October to $877,278 last month. Prices are now 7% lower than the county’s peak reached in April.
- In Ventura County, the typical home price rose 1.2% from October to $837,891 last month. Prices are now 3.9% lower than the county’s peak reached in May.