Los Angeles Home Prices Drop for the First Time Since January

Have housing costs reached their limit?

For the first time since January, home prices in Los Angeles County fell month-to-month in July, according to a new report from CoreLogic.

The median sale price for the month was $607,500, down 1.2 percent since June, when home prices soared to a record-high $615,000.

LA’s all-time price record had been shattered in each month leading up to July.

But real estate experts have predicted that Southern California’s hot real estate market could be cooling off. A recent analysis from Zillow found that the number of homes on the market with price cuts is up since the beginning of the year, suggesting that buyer interest may be waning.

“It’s not unusual for a regional median sale price to fall back a bit from an all-time high,” says CoreLogic analyst Andrew LePage.

But year-over-year price growth is also slowing a bit. Across all of Southern California, prices rose 5.8 percent in July (and 5.7 percent in LA County), compared to July 2017. That’s the lowest yearly increase in 18 months.

LePage points to the “continuing erosion of affordability” as a likely culprit for sagging price growth.

Rising mortgage interest rates are making even small jumps in sale prices significantly more difficult for buyers to cover. Factoring in interest rate growth, median mortgage payments were around 13 percent higher in July than a year ago, according to LePage.

That may also be contributing to an drop in the overall number of home sales. In LA County, 6,971 homes sold in July—down from 7,607 a month earlier. LePage says declining sales can’t be explained by the number of houses on the market.

“The overall trend in recent months, has been toward more listings,” he says.

Instead, it’s possible that many home shoppers are simply “unable or unwilling to buy.”