For the first time in years, the California housing market has seen a noted decrease in sales, causing the listing prices of homes to experience a drastic drop.
Experts indicate that rising mortgage rates have had a profound impact on the market, making many houses unaffordable for those looking to buy and sharply slowing the amount of homes being sold compared to years past.
“Huge change,” said John Moreno, a local real estate agent. “Everything just kind of shifted starting probably at the end of Spring, beginning of Summer.”
He admits that for the first time in a long time, he’s been forced to price things differently for his clients looking to make top dollar on their property.
“Sometimes, that ruling is gonna require maybe putting a list price lower than we would have six weeks ago, two weeks ago even.”
Moreno said if they had priced it like they would have months ago, they probably wouldn’t have seen much activity from prospective buyers.
In a recent report released by Zillow, the average price of a home in Southern California has dropped 6% since May — the biggest drop since 2012.
“With the interest rates going up, everybody kinda freaked out,” Moreno said. “Obviously with the interest rates increasing, the amount of monthly payment that you’re able to qualify for is going to change the amount of loan that you can actually get to purchase the home.”
According to a report released by the California Association of Realtors on Wednesday, the expected average for 30-year, fixed mortgage interest rates elevated at 6.6% in 2023, up from 5.2% in 2022 and from 3.0% in 2021. The California median home price is forecast to drop 8.8% to $758,600 in 2023, following a projected 5.7% increase to $831,460 in 2022 from $786,700 last year.