Rising Home Prices May be Discouraging California Buyers

Rising home prices and higher interest rates may be discouraging housing activity in California markets. Although median home prices in Southern California still rose nearly 6% in July, this was the weakest annual growth in 18 months. While prices are still much higher this year than last, there is an unusually smaller gap between them.

CoreLogic analyst Andrew LePage said the mortgage on a median-priced home in Southern California has risen 13% in a year. He called the trends a further sign of the continuing erosion of affordability. Home sales remained basically flat in July compared to July 2017.

Weak Sales Compared to Housing Demand

LePage said that would-be buyers are unable or unwilling to buy. This is due to high prices and lack of inventory. In August, there were nearly 46,000 homes for sale in Southern California. That is over 7,000 more than were on the market at that time last year.

The housing market is “softening” all over the state, confirmed California Association of Realtors (CAR) chief economist Leslie Appleton-Young. However, she added the softening of the market is more indicative of a market shift rather than a major market correction.

Brokers May Beat the Heat with Pocket Listings

Because the housing inventory is so tight still, some brokers say they are turning to pocket listings. Pocket listings are not officially listed on the Multiple Listing Service (MLS), although they are not necessarily secret, either.

Pocket listings were originally kept confidential. Oftentimes, this was to protect the privacy of the seller. This type of pocket listing is now known as a “double-secret” listing. It is only available to a select list of preferred and trusted buyers. The other option is not so confidential, and brokers may blast the information about the pocket listing across social media accounts or other venues. Agents and investors also benefit from this strategy because it demonstrates that the individual effectively marketing the listing and procuring a buyer at top dollar can bring value to both parties.