The unexpected COVID-19 pandemic has had a huge impact not only on the lives of individuals, but on entire communities and businesses, as well. The real estate industry has not been spared from the dramatic effects of this global health crisis. Fortunately, numbers are trending back in the right direction as we enter the second half of 2020.
Record-setting growth prior to the outbreak
Prior to the pandemic, the Southern California real estate market was enjoying a successful stretch toward the end of 2019. In fact, prior to the widespread area lockdowns and business stoppages put in place to curb the rapid spread of the deadly virus in March, the SoCal housing scene was setting record highs.
In January, financial and property data analytics firm CoreLogic/DQ News reported the following highlights covering the six counties that comprise the SoCal region:
- 19,337 residences sold in December 2019, with a median price of $550,000 across the six counties.
- 12,837 of these sold homes were single-family houses, with a median price of $570,000.
- Los Angeles County had 6,293 sales, which is an increase of 18.4% over the previous 12 months. The median sale price of $628,250 reflected an increase of 7.4% over the previous year.
- Orange County set a record with a median sale price of $732,750 in, resulting from 3,109 home sales.
Before the fallout of the pandemic hit, Orange County continued to break records, with the median home sale price hitting $755,000 in March.
A drastic slowdown in homebuying and selling
Needless to say, the coronavirus crisis had a drastic impact on real estate activity in the six-county region. With in-person, face-to-face meetings discouraged and even prohibited outright, purchases and sales of homes slowed down significantly.
The drop in sales was most notable in May, when closed sales fell 45% lower than those from the same time in 2019. In Los Angeles County in particular, sales fell by 49.5%.
Despite this drop, the median home price across the SoCal region still climbed by 2.7%, but this is significantly a smaller increase compared to gains recorded in March (6.8%) and April (4.3%).
Signs of a strong rebound?
While the coronavirus threat remains at large and there’s no sure sign that the worst is already over, the good news is that people and businesses are already adjusting to COVID-19’s “new normal.”
As a result, American homebuyers are growing more confident about pushing through with their plans moving forward. The National Association of Realtors reported that purchase contracts in May demonstrated a significant rebound, increasing by 44.3% from the previous month. In contrast, pending home sales dropped by 21.8% from March to April.
In other words, the month that saw the most significant plunge in closed sales was also the same month that had the most encouraging signs of a strong bounce-back from the real estate industry.
Here are specific highlights for the Los Angeles and Orange counties, based on Zillow’s report for the week ending on June 20:
- 2,058 new home deals signed into escrow—a 35% improvement from the previous month
- 2,821 new listings—an increase of 0.7% from the previous week, but still down by 2.8% from the previous month
- 17,363 homes on the market—an increase of 8.7% since May, but still a 25% drop year-over-year
Want to keep track of the latest real estate market updates in your Southern California neighborhoods? Keep in touch with me, LA County real estate expert Kathy Seuylemezian. Give me a call at 818.949.5205 or email kathy(at)imuragent(dotted)com today.