Home prices are up as sales drop
SoCal home prices surged last month, with the median price rising 6.2% from July 2015. Meanwhile, sales dropped 10.7%.
Southern California home prices kept surging last month, with the median price rising 6.2% from a year earlier, according to a new report.
The six-county region’s median clocked in at $465,000 in July and has increased every month for more than four years, real estate firm CoreLogic said Wednesday.
Regionally, prices are still 8% below their bubble-era highs, but in some communities — such as Highland Park in northeast Los Angeles and broad swaths of the Westside, including Santa Monica — the combination of record low mortgage rates and a shortage of homes for sale has pushed values beyond levels seen last decade.
Sales, meanwhile, fell 10.7% last month from July 2015 — the largest decline in nearly two years. That could be a sign that would-be buyers are finally balking at forking over an ever greater share of their income for housing.
But CoreLogic had a more benign explanation: Compared with July 2015, there were two fewer business days last month in which to record sales with county authorities.
“The average number of home sale transactions recorded daily in July 2016 was only about 2 percent lower,” CoreLogic analyst Andrew LePage said in a statement.
Still, there are some signs buyers are growing hesitant and the rate of price appreciation is shrinking as economists predict that it will.
In May, the closely followed Case-Shiller home price index rose 5.4% from a year earlier in Los Angeles and Orange counties, compared to 6% for most of the last year.
Though it lags behind other price indicators, the index is widely considered the most reliable read on home values. It 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.
Many experts predict prices to level off more — in large part because only about 30% of California households can reasonably afford to purchase the state’s median-priced home, which last quarter was $516,220, according to the California Assn. of Realtors.
For now, there is plenty of demand — and cheap financing — to push values sharply higher. Prices rose in all six counties tracked by CoreLogic.
In Los Angeles County, the median rose 8.5% to $531,500; Orange jumped 4.1% to $640,000; San Bernardino 4.9% to $280,000; Riverside 5.2% to $335,000; San Diego 5.3% to $495,000; and Ventura 2.5% to $523,000.
Those kinds of rising home values in Southern California and across the nation have improved the outlook of builders. This week, the National Assn. of Home Builders said its confidence index rose two points in August, and the Commerce Department reported that builders started 2.1% more homes in July than a month earlier.
Still, developers are not constructing homes at historically normal levels — one of the factors experts blame for the shortage of houses for sale and strong price appreciation.