In 2023, the consulting firm expects declines in the mid single digits in Los Angeles and Orange counties and for prices to fall in the high single digit range in the Inland Empire. In May, John Burns started forecasting that both national and Southern California prices would decline next year, in part because the firm sees a recession as increasingly likely. Others that recently shifted forecasts to include home price declines in 2023 are Capital Economics, an international economic research firm, and John Burns Real Estate Consulting in Irvine. Then in 2023, he expects the Federal Reserve’s actions to fight inflation will cause a mild recession and the combination of job losses and higher rates will cause the statewide median price to fall 7.1% compared with this year, with similar declines in Southern California specifically. But for now, he expects the California median sales price for all of 2022 to be up 9.7% from a year earlier, a sharp slowdown from the nearly 20% growth seen in 2021. Levine is still putting the final touches on a forecast to be released in July. In March, that payment was $506 more expensive in April, $655 more and as of last week it was nearly $1,000 higher at $4,428.Ī growing number of home sellers have responded to waning demand by dropping their list prices, a first step if overall sales prices are going to fall in the future.īusiness The Great SoCal House Hunt step-by-step guideĪ no-BS guide to buying your first home in Southern California. Mortgage rates started the year in the low 3% range but had risen above 4.5% by late March, surpassed 5% in April and surged to nearly 6% this month, according to Freddie Mac’s closely observed mortgage survey.įor a $760,000 house, the current median price in Southern California, that means a monthly mortgage payment in early January would’ve been $3,493, including property tax and insurance, with a 20% down payment, according to a Redfin mortgage calculator. Then he saw prospective buyers pull back in real time. First, he ran the numbers on how much repeated surges in mortgage rates affected purchasing power. Levine said it was just over the last month that he became convinced prices would turn negative. What happens now that the rate for a 30-year mortgage has hit 5%? Low mortgage interest rates have helped drive up home prices for a decade. Will that slow our out-of-control housing market? “Prices are going to go down.”īusiness Mortgage rates are rising. “It’s noteworthy,” said Jordan Levine, chief economist at the California Assn. Few well-known experts - if any - predict price declines anywhere near what happened during the Great Recession.īut the fact some major forecasters now foresee sustained price declines - something that hasn’t happened in more than a decade - underscores just how quickly the housing market is changing. Many analysts still see that slower-growth scenario as more likely. That is: Prices would keep climbing but less than they had in the last two years. Such predictions mark a shift from earlier this year, when there was greater expert agreement that rising mortgage rates would simply slow price appreciation. Sales are down, inventory is rising and many prospective buyers and sellers have a simple question: Will home prices fall?Īccording to some analysts, the prospect is growing more likely as the slowdown deepens, with some now adjusting their forecasts to call for price declines next year. Rising mortgage rates have slowed the housing market across the nation and Southern California.
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