On July 24th, 2018, CNBC published a story online titled “Southern California home sales crash, a warning sign to the nation.” The timing of this story roughly marks the beginning of the ‘Price Correction,’ as many in the industry are calling it.
The Price Correction stirs thoughts of the Great Recession, but it’s an entirely different beast. For years, our market in Southern California has seen staggeringly low inventory levels, bottoming out in December of 2017 at an all-time low. This super-low inventory caused prices to skyrocket. In conjunction with low inventory, the available homes that were on the market – especially new homes – were being relentlessly pursued by foreign investment, mostly comprised of Chinese cash. For several years now, the primary influencer of home prices and sales (at least in SoCal) has been that Chinese cash and it’s propped our market up disproportionately to the reality of it.