Home owners in and around Southern California have been patiently waiting for the housing market to pick up in 2014, however they may continue waiting as this year’s market is proving to be nothing like last year. In 2013, home price appreciation rates were astronomical, allowing for many Southern California home owners who had lost a considerable amount of equity in their homes following the housing bubble burst to gain plenty of value back and then some.
Following those price gains that many economists considered unsustainable, the housing market this year is quite different. Many markets in Southern California are still experiencing low inventory levels, however as this worked to benefit home owners last year, giving them the power to charge the large population of buyers a higher price for their coveted homes, it seems the buyer backlash has finally occurred.
In order to lure buyers into a sale, home sellers are having to slash their prices significantly. According to Pat Veling of Real Data Strategies, a Brea-based housing data firm, the average price cut for homes priced under $1 million was $15,500 this summer. This cut is significantly higher than the summer of 2013 when home sellers slashed an average of 2013.
For sellers on the higher priced market, homes costing $1 million or more, the average price cut this summer was $156,500, again significantly higher than 2013’s sumer buying season, which saw cuts averaging around $115,000 in this market.
“Buyers are saying ‘we’re not going to take it anymore,’” Veling said to the Orange County Register. “What we’re dealing with now is a historically normal result. Yet it feels like it’s bad because we’re coming off such a frenetic period.”
Orange County Home Prices Level Off
What seems like a stagnant period for the Orange County housing market is actually shaping up to be a factor that could help both home owners and home buyers. Throughout the last year or so, buyers have been priced out of many markets thanks to a tricky combination of low inventory and high prices for the few homes that were available.
With a valuable part of the housing market equation being pressed from all sides, something had to give. Figures from CoreLogic DataQuick, an Irvine-based real estate analytics company, show that home sales have been listless since last October with sales from this summer down by 9 percent from the summer before.
Home prices happened to be that something. Appreciation rates have all but halted, giving buyers a chance to catch their breath. CoreLogic DataQuick reports that Orange County’s median home value has been flat since June. While many markets across Southern California are still in seller’s territory, the closer things get to neutral, the better for the market in general.
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