Southland home prices surge in April as inventory tightens
A frustrating housing market for Southland buyers swelled in April as prices surged and inventory tightened.
Homes sold at the fastest clip for that month in seven years, as regular buyers and investors snapped up more than 21,000 homes in the six-county region, real estate firm DataQuick reported Tuesday. That was a 4.1% increase from March and a 9.5% jump from a year earlier.
Demand for move-up and high-end homes surged as mortgage interest rates remained near historic lows. Investors remained a significant force, and for-sale inventory remained well below last year’s levels, underscoring the competitiveness of the market.
“You are seeing strong demand against very limited supply, and that’s putting upward pressure on prices,” said Esmael Adibi, director of Chapman University’s A. Gary Anderson Center for Economic Research.
The median price for a Southland home last month reached $357,000, up 3.3% from the previous month and 23.1% from April 2012. It was the highest level for the region’s median home price since June 2008, when it hit $360,000.
The median price is the point at which half of homes sold for less and half for more. The data represent completed sales, meaning the increases are representative of buyer demand in early April and previous months.
The market has heated up even more since then, real estate agents said.
“If anything, it seems like things have gotten more crazy,” Lakewood real estate agent David Emerson said.
The median has increased year over year for 13 consecutive months, with double-digit gains in every month since August. The median nevertheless remains 29.3% off its peak of $505,000, from summer 2007.
“From an affordability perspective, this remains an excellent time to buy,” said Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate. “The price movements in the middle to upper ranges is consistent with a market that is normalizing.”
Median prices are rising in part because higher-end properties are selling faster than entry-level homes. But other price measures that seek to account for the mix of homes sold have also confirmed a fast-rising market. The Standard & Poor’s/Case-Shiller index indicated that prices in the Los Angeles metro area, which includes Los Angeles and Orange counties, had risen 14.1% year over year in February.
The eye-popping price gains have unleashed a debate about how long they will last.
Syd Leibovitch, president of Rodeo Realty, predicts home prices will post significant increases into 2015.
“You haven’t seen anything yet,” Leibovitch said. “We are still just correcting.”
Others predict price gains will slow as more inventory comes onto the market. Glenn Kelman, chief executive of online broker Redfin.com, said he’s seeing more inquiries from potential sellers.
“People we are talking to about selling their homes are getting more interested in it,” Kelman said. “We are starting to see bidding wars ease slightly. They were very intense a month ago, with usually more than 10 offers, and now it’s more like three or four.”
The number of listed homes increased slightly in April but remained low, according to Realtor.com. In Los Angeles County, listings were up 1% from the previous month but down 45% from the same period a year earlier. In Riverside and San Bernardino counties, inventory was down 1% from the prior month and 36% from the same month a year earlier.
In Orange, San Diego and Ventura counties, inventory in April was up slightly from the prior month but down dramatically from the same month last year.
In the region’s more affordable markets, prices are surging and sales are down. April sales of homes below $200,000 plummeted 29.8% from the same month a year earlier, while sales of homes below $300,000 fell 21.1%. Sales in these neighborhoods are down because of a supply shortage. Many owners in those areas still owe more on their homes than they’re worth. Meanwhile, investors have snapped up many low-priced properties to hold and rent out.
In the region’s move-up market — homes priced $300,000 to $800,000 — sales rose 35.4% year over year. Sales of homes priced above $800,000 rose 51.4%.
