Southern California home prices jump, U.S. values surpass bubble-era peak
Southern California home prices jumped last month, but sales flatlined in a region where homeownership is increasingly out of reach for the middle class.
The six-county region’s median price rose 6.9% from a year earlier to $465,000 in October, real estate firm CoreLogic said Tuesday. Sales inched up 0.3%.
Prices in Southern California and across the nation have risen steadily in recent years – a result of an improving economy, rock-bottom mortgage rates and a shortage of homes for sale.
Nationwide, prices have now surpassed their bubble peak in 2006, not adjusted for inflation, according to the closely followed Case-Shiller index, also released Tuesday.
That gauge lags behind other home price indicators but is widely considered the most reliable read on home values. In the Los Angeles metro region, which includes Orange County, prices in September jumped 5.9% and are now 7.8% below their bubble peak, Case-Shiller data show.
The price surge has locked many first time buyers out of the market. But it has been a boon to owners, many of whom regained equity after being underwater on their mortgages following the Great Recession crash.
The gains have been seen across Southern California, though inland areas remain further behind. In October, the median price — the point where half of homes sold for more and half for less — rose in all six counties compared to a year earlier, CoreLogic said.
In Los Angeles County, the median jumped 7.4% to $525,000; in Orange, 9% to $655,000; in Ventura, 7% to $535,000; in San Bernardino, 9.6% to $285,000; in Riverside, 8.1% to $335,000; and in San Diego,11.1% to $507,500.
The sustained price gains have real estate agents, buyers and sellers wondering how long the hot market can continue.
Most economists say price increases should be smaller next year as families struggle to make larger offers on homes. Wage growth simply isn’t keeping up with the rising cost of housing, they say.
Also, mortgage rates have begun to rise following the election and some experts predict that they will increase next year as well. The average 30-year fixed rate mortgage for the week ended Nov. 23 was 4.03%, up from 3.54% three weeks earlier.
According to the California Assn. of Realtors, only about a quarter of households in Los Angeles and Orange counties can now reasonably afford to purchase the median-priced single-family home.
October’s Southern California median of $465,000 was 6.9% above the same month a year earlier – matching a nine-year high reached in June.
Whether the latest data point to a softening market is unclear. The median often peaks for the year in early summer given strong seasonal demand.
The S&P CoreLogic Case-Shiller index gives a better, albeit delayed, look at home values. But it was also inconclusive. That index compares the latest sales of detached houses with previous sales and accounts for factors such as remodeling that might affect a sale price over time.
For the month of September, the index showed prices in Los Angeles and Orange counties increased 5.9% from a year earlier. That’s below the mid-6% range seen at the beginning of 2016 but an acceleration from recent months.
10:20 a.m.: This article was updated throughout with staff reporting and additional details on Southern California home prices.
This article was originally published at 7:00 a.m.