If you love a vibrant culture, lively community, year-round sunshine, and stunning beaches, Southern California is one of the best places to live. Comprising six distinct counties, this coastal region offers several attractions to make it a relaxation enclave, from hiking among the Cave of Munits to surfing at Malibu Beach.
Aside from its diverse natural attractions, Southern California has some of the most upscale and dynamic real estate in the region that captivates buyers and sellers alike. Despite the recent market volatilities triggered by higher interest rates and rising inflation, Southern California's housing market remains healthy, with various neighborhoods projecting a rosy future growth. Below is a detailed overview of Southern California's market prices, trends, and forecasts for 2023.
South California housing market and historical trends
Here are some crucial trends in the Southern California housing market to watch:
Median prices
Available data shows home prices in the six-county region were up remarkably since the beginning of the year. As of June 2023, the average median home price in the region was
$730,000, rising for the fifth time in six months. Orange County posted the highest median sale price at
$1,059,000 followed by San Diego County at $835,000. Los Angeles had a mean price of $830,000, with Ventura, Riverside, and San Bernardino registering price means of $807,000, $560,000, and $475,000, respectively.
Mortgage rates
Rising mortgage rates coupled with low inventory have contributed to the decline in home sales across the country, and Southern California is no exception. As of September 2023, the interest rates in California were
7.63% for a 30-year fixed mortgage and 6.74% for a 15-year mortgage, up from the record lows of 2021. However, despite the rising rates, interest from potential buyers is gaining traction, showcasing South California as one of the hottest markets in the country.
Home listing
As of June 2023, Southern California home sales volume was down
-24.3% year-over-year. All six counties registered sales drops ranging from -16.6% in Orange County to -35.6% in Ventura County. With exceptionally low inventory, buyer competition remains high despite rising home prices and increasing interest rates. Experts project a diminished inventory going forward, translating to sustained higher home prices in the short term.
Property taxes
At
0.71%, South California's overall property taxes are below the national average of 0.99%. The purchase price of the property determines the state's property taxes. When you buy a home, its assessed value equals the purchasing price. From here, the assessed value increases each year according to the inflation rate. However, there is a specific legal cap on these increases as per
Proposition 13, a law approved by California voters in 1978. In essence, the law limits general property taxes to 1% of a property's market value while restricting increases in assessed value to 2% per year.
Population growth
Southern California still beckons with its charming coastal beauty and the magnetic force of bustling entertainment and technological industries. As per the latest census, Southern California had a registered 10-year population growth of
4.9%, with Riverside County registering a growth rate of 10.4%. Much of the region's population is concentrated in the Greater Los Angeles Area, encompassing five counties, including Los Angeles, Ventura, and Orange. Southern California's expanding population can pressure the already constrained housing inventory, leading to higher competition and prices. On the positive side, a growing population typically leads to an increased demand for housing for homeownership and rental properties. This can drive up property prices and rents, making real estate a potentially lucrative investment.
Forecasting the Southern California housing market for 2023 and beyond
Low inventory and increasing population will likely put upward pressure on home prices, making Southern California one of the priciest property markets in the region. Here is a forecast for the housing market for the remainder of the year and beyond.
Moderate increase in home prices
In the recent past, median home prices in Southern California have been growing, albeit at different rates based on the specific county. While some counties experienced modest price growth rates, others, like Orange County, registered notable increases. However, many experts anticipate a slowdown in price growth in the coming months with the expected easing of interest rates.
A stabilizing market
The sales data reveals a conflicting performance across all Southern California counties. While some regions are realizing enhanced year-over-year sales growth, others are registering depressed sales. Generally, the region has experienced slow sales due to the recent slowdown in the general economy. With experts projecting improved economic activity, the market will likely gain some stability, with moderate growth expected in some areas.
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The housing inventory and supply are crucial factors determining the market dynamics. In Southern California, the housing market has witnessed a consistent downward trend, contributing to a competitive environment and sustained price increases. With major players projecting a cautious outlook on price hikes and the expected easing in inflation, the supply situation will likely improve, albeit gradually. This trend could offer buyers more options and potentially stop the upward pressure on prices.
Economic factors
Several economic factors combine to shape the housing market of a region. Factors such as interest rates, employment rates, and property taxes are integral when determining the growth of the Southern California real estate market. The recent hikes in interest rates could have adversely impacted sales, although this is expected to stabilize in the coming months. With an average employment growth rate of
3.95% and potential moderation of interest rates, buying sentiments will improve, boosting the market towards the end of 2023 and beyond.
Four of the best neighborhoods to live in Southern California
Southern California boasts a long list of nice neighborhoods to live in. Here are just a few of the best places for communities to live here:
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Los Angeles: This beachfront city has stunning views, a robust retail scene, and plenty of fine dining spots. In addition to the upscale vibe, there are exciting natural attractions, including beautiful beaches, sweeping cliffs, and natural coves. It isn't the most affordable neighborhood in South California, but undeniably one of the most sought-after.
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La Cañada Flintridge: This bustling coastal neighborhood features excellent beaches and dining opportunities. It is a highly livable city with a more fast-paced lifestyle compared to other neighborhoods. Currently, there are several
houses for sale in La Cañada Flintridge offering the best features and amenities.
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Irvine: Irvine is a master-planned community in Orange County with a population of 307,000. It is home to several notable corporations in the technology and semiconductor industries and has a highly-rated learning institution.
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Manhattan Beach: If you enjoy beach views, Manhattan Beach could be an excellent locale to call home. Known for its moderate climate and livability, this coastal community has an extended beach stretching around 2.1 miles.
Jeannie Garr Roddy can help navigate the Southern California real estate market
Amid turbulent economic times, the Southern California housing market is expected to maintain a relatively stable trajectory for the rest of 2023 and beyond. With a projected improvement in economic conditions, the region will likely experience moderate price increases, stable sales, and increasing inventory. If you are looking into La Canada Flintridge,
contact Jeannie Garr Roddy. She can help you find an ideal home that matches your specific needs and budget or sell your current home for a premium price.
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