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Southern California home prices surge in March; sales inch up

Southern California home prices surge in March; sales inch up
A home in South Pasadena is listed for sale last year. The state’s median price is projected to end this year at $503,900, up 6.2% from last year. (Al Seib / Los Angeles Times)

Southern California home prices jumped 5.6% in March, as buyers fought over a meager supply of homes for sale and bid up values.

The six-county region's median price hit $449,000 last month, up from $425,000 a year earlier, real estate data firm CoreLogic said Monday. Sales, meanwhile, rose only 1.9% from March 2015 -- reflecting a tough market defined by high prices and low inventory.

Indeed, the region's hot housing market has made it increasingly tough for young families who want to purchase a home, even as it's largely wiped out the foreclosure crisis and helped existing homeowners build equity.

In Los Angeles County, for example, only 27% of households could reasonably afford to purchase the median-priced home toward the end of last year, according to the California Assn. of Realtors.

Given that dynamic, economists generally expect prices to rise less in 2016 than in recent years, as buyers increasing struggle to raise their bids.

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"Many would-be buyers continue to face hurdles such as waning affordability, moderately tight credit and a relatively tight inventory of homes for sale,," CoreLogic analyst Andrew LePage said.

At the moment, price growth is still strong. In March, the region's median price jumped $19,000 from just February.

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Much of the frenzy is due to a shortage of homes for sale, economists and agents say -- a problem that has emerged across the nation. Many older Americans are staying in their homes, rather than downsizing, and home builders have yet to ramp up construction to historically normal levels -- two factors that have held back new listings.

California has long under-built relative to job and population growth, contributing to far higher prices than elsewhere in the nation, economists say. According to the state's independent Legislative Analyst's Office, developers would have needed to build millions more homes over the last 30 years to keep housing prices in line with the rest of the country.

There are some signs the high prices are changing consumer behavior.

In March, sales in the relatively affordable Inland Empire accounted for 30% of all sales in the region, compared with 28.8% a year earlier. In Riverside and San Bernardino counties, sales respectively rose 4.8% and 7.7% from a year earlier.

In pricier Los Angeles County, sales dipped 1.4%, while in Orange County they rose 0.8%. If would-be buyers increasingly balk at paying high prices in the coastal counties, it could take some steam out of those markets.

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But for the moment, there's simply more demand than there are homes for sale.

L.A. County's median price rose 5.9% in March, to $506,000, while in Orange County the median climbed 6.8% to $625,000.

Reach me by email at andrew.khouri@latimes.com or on Twitter @khouriandrew

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