The long rise in home prices across Southern California could turn into a decline, analysts say. The question is: How far will they fall?
The prospect of decreasing prices is growing more likely as the housing market slowdown deepens, with some analysts adjusting their forecasts to call for prices falling next year, the Los Angeles Times reported.
The forecast marks a turnabout from early this year, when there was general consensus that rising mortgage rates would simply slow price growth. Experts said prices would keep climbing, but less than they had in the past two years.
Many analysts still support the slower-growth scenario. And few, if any, predict price declines near those of the Great Recession.
That 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 has changed. Rising mortgage rates, spurred by the Federal Reserve Bank’s upticks in interest rates, have slowed the housing market across the nation and Southern California, with the number of sales down and inventory rising.
“It’s noteworthy,” Jordan Levine, chief economist at the California Association of Realtors, told the Times. “Prices are going to go down.”
Levine expects the California median sales price this year to be up 9.7 percent from 2021, a slowdown from the nearly 20 percent growth seen last year.
Next year, he thinks the combination of job losses and higher interest rates will cause the statewide median home price to fall 7.1 percent compared with this year, with similar declines expected in Southern California.
[Los Angeles Times] – Dana Bartholomew
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