For Sale

Housing price reductions are rising in the Southland

By Tim Logan, Andrew Khouri

The latest sign that buyers are gaining leverage in Southern California’s housing market: Price cuts are back.

The number of homes with reduced asking prices has risen sharply in recent months, a reversal from last year’s sellers’ market, when list prices seemed more like a floor than a ceiling.

In Orange County, the region’s priciest market, about one-third of sellers have been forced to cut prices, according to data from real estate firm Redfin. Across the Southland, prices have hit a plateau this summer, with sales volume slumping as buyers got pickier.
A lot of what we’ve seen over the last six or eight weeks is people lowering their prices to get buyers in the door. – Paul Reid, a Redfin agent in Temecula

These trends have been building all year. But home sellers — often the last to see market shifts — are finally getting the message, said Paul Reid, a Redfin agent in Temecula.

“A lot of what we’ve seen over the last six or eight weeks is people lowering their prices to get buyers in the door,” Reid said.

The shift from a red-hot sellers’ market to something more balanced is reflected in price trends.

Every month for nearly two years, starting in mid-2012, the median home price in Southern California notched double-digit annual gains, according to housing data firm CoreLogic DataQuick. The growth peaked last June, with a 28% gain.

But the 9.1% year-over-year increase in August marked the third straight month of single-digit gains. In higher-priced parts of the region, gains are even slower; it was just 5.4% in Orange County.

Still, August’s median was $420,000, the highest point since the recession started in December 2007. That’s keeping many buyers on the sidelines, said Andrew LePage, an analyst with CoreLogic DataQuick.

“Prices are high enough to be a hurdle for a lot of buyers,” he said.

After two years of bidding wars and big price run-ups, some sellers have yet to come to terms with reality, said Steven Thomas, chief economist at Reports on Housing, which tracks the Southern California market.

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