Southern California market cools, calming fears of housing bubble
Fears of another housing bubble diminished in September, as the Southland real estate market continued its cooling phase.
For the third month in a row, the median home price in Southern California remained almost flat at $382,000. According to DataQuick, only 19,112 houses sold during September in the six-county region, making for an unusually steep month-over-month decrease in sales activity. The fall season typically sees a decline in market activity; average regional sales decreased 9.3% from August to September, but this year sales in the local market fell by 17.1%.
This steep slowing trend was echoed nationwide, with the majority of the 20 major metro areas tracked by the July S&P/Case-Shiller report showing similar declines in home price appreciation. Much of the national cooling trend can be attributed not only to seasonal factors, but to buyer fatigue in the wake of rapid price increases and rising mortgage rates, as well as cash-investors pulling out of the market.
In addition to dismissing fears of another housing bubble, the cooling trend shifts the market to be in favor of buyers. With less competition on the market, sellers need to offer more incentive to potential buyers, such as reducing the asking price or ensuring a home is in a complete state of repair.
However, next spring is expected to return to an even hotter market pace by some analysts, making now the perfect time to buy in Southern California.
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