Good luck finding a new home to buy in Southern California these days-the supply of new home projects open and selling in Southern California is currently at a 20-year low. Cautious capital, a lack of finished lots, and notoriously slow planning departments are all contributing to a serious deficit of new for-sale housing in the region.
There are currently just 419 actively selling new home projects in Southern California. In comparison, the market has averaged 1,045 actively selling projects annually over the last 20 years. In peak years, there have been over 1,600 actively selling projects. The current supply is 60% below the long-term average and 75% below peak years.
The number of active projects in Southern California would need to be 2.5 times higher than today just to return to the average of the last 20 years.
The lack of new home supply is holding down total sales activity and contributing to rising prices. Historically, when the supply of new housing has increased, new housing’s capture of total sales has increased as well. Over the last 20 years, new home sales have represented an average of 13% of total home sales in the region. However, when supply is highest, the new home capture rate rises to over 16%. Conversely, when supply is lowest, sales capture plummets, averaging only about 6%. If there were more new home supply on the market today, new home sales would be much higher.
Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed
“Fewer properties for sale with such remarkably low interest rates make it a great time to sell but a more difficult time to buy”