Southland housing prices hit new highs

After renting a cramped bungalow with their two small children, the Hogue family is getting ready to move into a home of their own, a one-story house on a quiet Huntington Beach street not far from relatives who will help out with babysitting.

They paid $910,000 for the home following an intense bidding war that drove the cost $30,000 above the asking price.

“The actual price of it wasn’t as big a shock as what you were getting for that price. The square footage. The lot,” Nick Hogue, 35, said of his new 1,350-square-foot, three-bedroom house. “Why am I spending so much for such a small house when you can get a mansion in Georgia or South Carolina (for the same amount)? You can’t put a price on weather.”

That price — $910,000 — also happens to be the median for all existing single-family houses sold in Orange County in February, almost double what it was a decade ago and $225,000 above the single-family median five years ago.

That record high was just one of numerous benchmarks set in Southern California’s housing market last month, a market some observers labeled as “crazy” and “nuts.”

The median price of a Southern California home — or the price at the midpoint of all sales — hit a record $619,750, up 14.8% or nearly $80,000 from February 2020, according to figures released Tuesday by DQ News/ CoreLogic.

That’s the eighth-largest

12-month price gain in the past three decades.

Orange, Riverside, San Bernardino and San Diego counties all recorded record-high median prices as well.

Sales volume also saw double-digit growth in February, with 18,344 homes changing hands last month, up 17.6%, DQ News/CoreLogic figures show. That’s the highest sales tally for February since 2006.

It was the sixth straight month that sales and prices experienced double-digit gains.

Market frenzy

Low mortgage rates continued to boost buying power and homebuyer demand, creating stiff bidding wars that pushed up prices just as the number of homes for sale fell to their lowest level in nearly 16 years.

“Rapid price growth over the last year is a reflection of severely constricted supply of homes on the market, demographic push coming from largest cohort of millennials who are about to or have recently turned age 30 to 32, record low mortgage rates … and pandemic induced demand for lower density, mostly single-family living with more rooms,” observed Selma Hepp, CoreLogic’s deputy chief economist. “The combination of these factors has led home prices to accelerate at the fastest rates since 20132014.”

Rates for a 30-year, fixedrate mortgage averaged 2.74% in the three months ending in February vs. 3.60% a year earlier.

Even though the median price increased nearly 15% in the past year, monthly loan payments rose just 2.9% for buyers putting 20% down, increasing to $2,022 a month from $1,965.

Mortgage rates rebounded slightly this month, rising as high as 3.09% last week. Some fear that could chill homebuying and cause price gains to moderate somewhat.

It won’t be enough to create a buyer’s market, said Steve Thomas, author of Reports on Housing.

“This is a shift from a housing market that is currently nuts, appreciating at about 1% per month, to a regular hot seller’s market with a normal 4-5% appreciation per year,” Thomas wrote in his latest analysis.

Inland bidding wars

Rancho Cucamonga agent Michael Albornoz hasn’t noticed any letup in demand in the Inland Empire, which had some of the region’s biggest price and sales gains in February.

For example, median prices rose 17.7% to a record $412,000 in San Bernardino County and 16.5% to a record $465,000 in Riverside County, CoreLogic figures show.

“What we’re seeing are multiple offers on everything. Crazy offers over the asking price,” said Albornoz, an agent with Realty Masters and Associates.

Albornoz received 19 offers on a three-bedroom, 2½-bathroom house in the Ontario Ranch development three weeks ago. It ended up selling $11,000 over the asking price.

“I’ve heard as much as 58 offers on properties,” he said. “I think there are a lot of people moving from the L.A. area because they can get more for their money here. I think they’re coming in with large down payments because mom and dad are moving in with them.”

As more families double up with aging parents, he said, some buyers are putting as much as 40% down.

“They want to get out of the city life,” Albornoz said. “It’s a little too congested over there.”

Median prices for existing houses and condos likewise hit all-time highs. The median house price topped out at $660,000 in Southern California, with median condo prices now at $520,000.

Buyer competition is a key reason.

The Hogues were among 14 people bidding on their Surf City house, which last sold for $460,000 in March 2011, or half of what they paid. After several rounds of counteroffers between three or four contenders, the Hogues dropped their loan and appraisal contingencies, meaning they would be on the hook even if their financing didn’t come through or the appraisal was too low. That got them the house.

“Your whole savings are put into this house,” Hogue said. “But aside from that shock, we’re so excited. I’m comfortable with the numbers. The whole pride of ownership is taking over.”