Southern California Real Estate Market Trends

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Q1

2022

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Our Southern California real estate market data is updated quarterly to aid in your real estate forecasts. Historical California real estate data and trends are included below the latest update. We break down our data by county, but we cover major cities in the SoCal area including Los Angeles, San Diego, Riverside, and Anaheim.

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Q1 2022 Gardner Report

Southern California
Real Estate Market Update

by Matthew Gardner

Below is the latest Southern California housing market trends analysis. Additional links:

Historical Southern California Data
Northern California Data
Other Regional Data

 

The following analysis of select counties of the Southern California real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.

 

Regional Economic Overview

The counties covered by this report have now recovered 1.89 million of the 2.17 million jobs that were lost due to the pandemic. With only 279,000 jobs needed for a full recovery, it is likely that the region will break above the pre-pandemic employment level by sometime this summer. Of note is that both Riverside and San Bernardino counties have already seen a full job recovery, and current employment levels are now more than 33,000 above the pre-pandemic peak. The region’s unemployment rate in February was 4.8%, down from 9.8% a year ago. The lowest rates were in Orange (3.7%) and San Diego (4%) counties. The highest rate was again in Los Angeles County, where it was 5.4%. In all, the Southern California economy continues to recover, with the Inland Empire performing very well. Of course, the region’s performance is influenced by Los Angeles County given its size, which is still acting as a bit of a drag to the overall job recovery. Although I hope the pace of job growth here will pick up, it will be held back by a labor force that has fewer persons in it today than it did at the start of 2020.

Southern California Home Sales

In the first quarter of the year, 42,069 homes sold, which is down 9.7% from a year ago. There were 9.6% fewer sales than in the fourth quarter of 2021.

Pending home sales—an indicator of future closings—rose more than 10% from the prior quarter, suggesting that sales activity in the spring may pick back up.

The most significant decreases in sales were in Orange and San Diego counties, but all markets fell. Significant supply-side issues persist as listing activity was down more than 25% compared to the same period in 2021. There were 8.9% fewer homes for sale than in the fourth quarter of 2021.

Buyers are looking, but choices are limited. Although listing activity has picked up in San Diego County, the other markets have not seen any growth. This will hopefully change as we move through the spring, but it’s not guaranteed, and buyers will likely remain frustrated.

A bar graph showing the annual change in home sales for various counties in Southern California between Q1 2021 and Q1 2022.

Southern California Home Prices

Home prices in the first quarter rose 19.1% compared to a year ago and were 4.2% higher than in the fourth quarter of 2021.

It appears as if the spike in mortgage rates during the first quarter has not dampened the market and, with more buyers than sellers, the market is still extremely hot.

The region saw double-digit price growth across the board, with Orange County again leading the way. Of note is that home prices in Riverside County rose 10.7% compared to the prior quarter.

Rising mortgage rates and prices are certain to push affordability down even further, which is concerning. The question remains whether rising financing costs will start to slow the market. For the time being, this does not appear to be the case.

A map showing the year-over-year real estate market percentage changes in various counties in Southern California for Q1 2022.
A bar graph showing the annual change in home sale prices for various counties in Southern California from Q1 2021 to Q1 2022.

Mortgage Rates

Average rates for a 30-year conforming mortgage were 3.11% at the end of 2021, but since then have jumped over 1.5%—the largest increase since 1987. The surge in rates is because the market is anticipating a seven- to eight-point increase from the Federal Reserve later this year.

Because the mortgage market has priced this into the rates they are offering today, my forecast suggests that we are getting close to a ceiling in rates, and it is my belief that they will rise modestly in the second quarter before stabilizing for the balance of the year.

A bar graph showing the average rates for a 30-year conforming mortgage, plus Matthew Gardner's mortgage rate forecasts for Q2 2022 through Q1 2023.

Southern California Days on Market

In the first quarter of the year, the average time it took to sell a home in the region was 22 days, which was 6 fewer days than a year ago but 1 day longer than in the final quarter of 2021.

Homes in San Diego County continue to sell at a faster rate than other markets in the region. In the fourth quarter, it took an average of 16 days to sell a home there—two fewer days than it took a year ago.

The other four counties also saw the time it took to sell drop compared to a year ago, but market time rose very modestly in Riverside, Los Angeles, and San Bernardino counties compared to the fourth quarter of 2021.

Limited inventory combined with growing buyer demand is creating a very tight market. Any increases we see in the number of homes for sale in the coming months is not likely to be enough to satisfy buyers.

A bar graph showing the average days on market for homes in various counties in Southern California during Q1 2022.

Conclusions

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

Despite low inventory levels and rising mortgage rates, the housing market continues to perform very well in Southern California. The spike in mortgage rates has yet to have a significant impact on price growth or demand; however, it will be interesting to check back in the second quarter because if there is an impact, that’s when we would likely see it.

A speedometer graph indicating a seller's market in Southern California during Q1 2022.

Sellers remain in the driver’s seat, but if higher financing costs start to affect the market, there may be a shift back towards more normal conditions. My instincts suggest that this will not be the case, but only time will tell. With all of this in mind, I have left the needle in the same position as last quarter.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

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Major So Cal cities covered in this report:

Los Angeles

San Diego

Long Beach

Anaheim

Santa Ana

Riverside

Chula Vista

Santa Clarita

San Bernardino

Garden Grove

Huntington Beach

Moreno Valley

Glendale

Irvine

Fontana

Lancaster

So Cal counties covered in this report:

Los Angeles

Orange

Riverside

San Bernadino

San Diego

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Gardner Report Archive

Southern California
Historical Reports

2022
Q1 2022 Southern California Market Trends

Q1 2022
POST | (PDF)

2021
Q1 2021 Southern California Market Trends

Q1 2021
POST | (PDF)

Q2 2021 Southern California Market Trends

Q2 2021
POST | (PDF)

Q3 2021 Southern California Market Trends

Q3 2021
POST | (PDF)

Q4 2021 Southern California Market Trends

Q4 2021
POST | (PDF)

2020
                    Southern California Real Estate Market Update

Q1 2020
POST | (PDF)

                    Southern California Real Estate Market Update

Q2 2020
POST | (PDF)

                    Southern California Real Estate Market Update

Q3 2020
POST | (PDF)

Q4 2020 Southern California Market Trends

Q4 2020
POST | (PDF)

2019
                    Southern California Real Estate Market Update

Q1 2019
POST | (PDF)

                    Southern California Real Estate Market Update

Q2 2019
POST | (PDF)

                    Southern California Real Estate Market Update

Q3 2019
POST | (PDF)

                    Southern California Real Estate Market Update

Q4 2019
POST | (PDF)

2018
                    Southern California Real Estate Market Update

Q1 2018
POST | (PDF)

Q2 2018
POST | (PDF)

                    Southern California Real Estate Market Update

Q3 2018
POST

                    Southern California Real Estate Market Update

Q4 2018
POST | (PDF)

2017
                    Southern California Real Estate Market Update

Q1 2017
POST | (PDF)

                    Southern California Real Estate Market Update

Q2 2017
POST | (PDF)

                    Southern California Real Estate Market Update

Q3 2017
POST | (PDF)

                    Southern California Real Estate Market Update

Q4 2017
POST | (PDF)

These Southern California real estate reports, data, forecasts, and market trends are provided for informational use. If you find it useful, please properly attribute this resource with a link. This region of California is also referred to as SoCal, LA, LA Metro, OC, and Silicon Beach.