Listings Balloon as Sales Slow

Posted: 11/27/2018

For the past seven years, the California market has seen tremendous gains. As mortgage rates have risen, the housing boom appears to be fading. Sales have slowed, while inventory has grown and listing prices have begun to drop. According to Christopher Thornberg of Beacon Economics, the current slowdown is “a bump in the road.” Southern California saw home sales tumble 7.5 percent in October compared to a year earlier. Last month was the third straight month of home sale declines and the lowest amount of homes sold since 2011.

There is low probability of the housing market crashing like it did in 2007. Since banks have reformed their lending practices, homeowners are not in the same situation as many were in 2007. Before the Great Recession, lenders allowed borrowers to obtain a loan without proof of income, and would offer loans with aggressively low mortgage rates, only to rise later and cause payments to become unaffordable.

Economists believe price increases will slow or possibly dip some over the next twelve months. Most agree that unless we are hit with a recession, home prices will not decline on a year-over-year basis. Sellers now are scaling back their ambitions as homes are sitting longer.