The Southern California housing market is awakening from a slumber.
After a year of sluggish demand, more homes sold and prices perked up in March as an improving economy and short supply pushed up the median home price by $10,000, according to a new report.
But whether strong price increases will continue is uncertain, economists said. If more owners don't list their homes for sale soon, the gains could accelerate as more buyers fight over slim pickings.
On the other hand, the median price — $425,000 in March — might not be able to climb much higher, constrained by lackluster wage growth, some economists said.
“Either story is possible,” said Leslie Appleton-Young, chief economist for the California Assn. of Realtors.
For now, would-be home buyers are bidding up prices.
The Southern California median price climbed 2.4% from February to $425,000 after hovering around $415,000 since May. Home sales surged 11% in March from a year earlier — only the third gain in 18 months, real estate firm CoreLogic said Thursday.
Job growth over the last year — as well as a period of subdued price appreciation — is giving more people confidence to purchase a home in pricey Southern California, economists said.
“We have had really good job performance for a while now,” said Richard Green, director of USC's Lusk Center for Real Estate.
Real estate agent Barry Sulpor said he's seeing increased demand in the beach cities of the South Bay — an area that never really saw a slowdown like other Southern California communities.
A three-bedroom town home in El Segundo recently had 14 offers, he said. It's about to close escrow for $810,000 — $41,000 over the asking price, Sulpor said.
The “open house was standing room only,” he said.
Even some agents in communities that saw demand taper off in the last year are optimistic.
Agent Carey Chenoski said her client recently sold a three-bedroom house in San Bernardino to a couple for $15,000 over asking price. That, she said, probably wouldn't have happened last year.
“It's actually pretty strong,” the Beaumont resident said. “On my street, three houses closed in the last week or so.”
Sales rose in all six Southland counties: Los Angeles, Orange, Riverside, San Bernardino, Ventura and San Diego. L.A. County saw a 12.5% increase, while Orange County posted a 8.9% gain.
The sales boost signals a strong start to the typically busy spring selling season, and economists said they expect demand to grow in coming months.
But the continued low supply of homes for sale is worrisome, Appleton-Young said, potentially putting California further out of reach for those with modest incomes.
She said some households may have to “double or triple up” while others may think about leaving the state if prices start jumping sharply.
Los Angeles, San Diego and Orange counties have less than four months of supply, Realtor data show, compared with the six-month level that is typically considered a balanced market between buyers and sellers,
“If that inventory doesn't come online, you will see something very akin to San Francisco,” Redfin chief economist Nela Richardson said. “We are in this kind of pivotal point in L.A.”
Buyers could also balk at high prices and the market will hit a ceiling. An example of that may be emerging in pricey Orange County, the region with a median price closest to its peak before the housing bust.
The median — the point at which half the homes sold for more and half for less — was unchanged in March compared with a year earlier, as nearly 20% fewer high-cost new homes sold.
The median price for a previously owned house rose 4% from March 2014, the slowest pace among Southland counties.
“I do think demand will increase,” Green said. “But people aren't going to have the dough to spend a lot more money on houses.”