White-Hot Housing Market Set For Cool-Down In Riverside County?

RIVERSIDE COUNTY, CA — Housing demand in Riverside County and across the state remained strong in March — and median home prices set records — but the effects of rising interest rates are being closely watched, according to a report out this week from the California Association of Realtors.

"March sales data continues to suggest strong buying interest and a solid housing market, as the effects of higher mortgage interest rates won't be realized for a few more months," said C.A.R. Vice President and Chief Economist Jordan Levine in a released statement Tuesday. "With the Federal Reserve expected to announce two back-to-back half-point interest rate hikes in May and June to combat inflation, interest rates will be elevated for the foreseeable future, adversely affecting housing demand and lowering housing affordability in the coming months, but the effects may not be visible until the second half of the year as many of the homes that are, or will be, closing were negotiated before the sharp increase in rates."

The 30-year, fixed-mortgage interest rate averaged 4.17 percent in March, up from 3.08 percent in March 2021, according to Freddie Mac. The five-year, adjustable mortgage interest rate averaged 3.19 percent, compared to 2.78 percent in March 2021.

In Riverside County, the median sold price of an existing single-family home during March jumped by nearly $100,000 to $620,000 compared to last year during the same period when the price was $535,000, according to C.A.R.

The March 2022 price set a record, but the county was not alone. Statewide, 25 counties set new record highs in March, C.A.R. reported.

Overall, California's median home price reached a new record high in March at $849,080 — surpassing the previous record of $827,940 set in August 2021. A surge in sales of high-end luxury homes was the primary factor for the jump. The share of million-dollar home sales increased for the second consecutive month, surging to 32.9 percent in March, the highest level on record, C.A.R. reported.

According to C.A.R. data, the following six Southern California counties reached a new record high median sold price in March:

One figure that showed slowing was year-to-year sales. Compared to March 2021, Riverside County existing home sales were down 9.5 percent last month. The trend was seen statewide but it was the smallest decrease in eight months, according to C.A.R.

Despite sky-high prices and rising interest rates, C.A.R. President Otto Catrina said buyers may have some reason for optimism as housing inventory continues to hit the market.

"An increase in active listings for the first time since prior to the pandemic should give consumers more options and alleviate some of the upward pressure on home prices, which bodes well for prospective buyers," he said.