Southern California home prices rose slightly in October, while sales jumped, the latest indication of a warming housing market.
The six-county region’s median price climbed 1.9% from a year earlier to reach $535,000 last month, according to CoreLogic data provided by DQNews.
Sales, meanwhile, increased for the second consecutive month, rising 8.2% from October 2018.
After years of sharp price increases, the housing market slowed markedly late last year. Sales plunged and this spring prices dipped for the first time since 2012.
But recently there have been signs of a pickup. Economists attribute the change to rising incomes and falling mortgage rates that have made housing relatively more affordable.
Average hourly earnings in California have risen by about 5% so far this year compared with 2018, according to the Bureau of Labor Statistics. And the average rate on a 30-year fixed mortgage was 3.66% this week, according to Freddie Mac, down more than a percentage point from a year ago. That change would save $260 on a monthly mortgage payment for a $535,000 house.
Most Southern California counties shared in the sales and price gains:
- In Los Angeles County, the median price rose 4.2% to $620,000, while sales climbed 5.6%.
- In Orange County, the median rose 0.7% to $725,000, while sales climbed 6%.
- In Riverside County, the median rose 3.9% to $395,000, while sales climbed 11.4%.
- In San Bernardino County, the median rose 5.2%, while sales climbed 8.1%.
- In San Diego County, the median rose 2.6%, while sales climbed 10%.
- In Ventura County, the median fell 3% to $580,000, while sales climbed 17%.
Home price gains are still muted compared with the beginning of 2018, which saw gains in the high single-digits.
Cherryl Weaver, a real estate agent who specializes in northeast Los Angeles, said some buyers she deals with are returning to the market because it softened and they have little desire to experience the bidding wars that drove them away in the first place.
“Buyers aren’t willing to go extravagantly high on pricing anymore,” she said.
Chris Thornberg, founding partner with Beacon Economics, said the market should pick up further next year. The economy is likely to keep growing, and California is likely to keep failing to build enough homes.
“It’s supply and demand,” he said.
In the third quarter, 31% of California households could reasonably afford to purchase the median-priced single-family house, according to the California Assn. of Realtors. That figure was 27% a year ago.
For those priced out, there can be great costs. Many who can’t afford to purchase a home are stuck paying unaffordable rent, putting them at risk of being forced from their communities and, in the worst cases, onto the street.
Beyond that crushing human toll, there’s an economic cost as well. An analysis released this week from the McKinsey Global Institute estimated the high cost of housing in L.A. County crowds out other spending and forces people into long commutes, reducing GDP by about 4% to 5%, or more than $30 billion annually.