Southern California home prices soared to all-time highs in March, pushing values further out of reach for some buyers and causing others to stretch their finances more than expected.
Home sales, meanwhile, dipped from year-ago levels due mainly to a persistent lack of inventory.
The median price of a Southern California home – or price at the midpoint of all sales – hit a record $519,000, up $40,000 or 8.4 percent from March 2017 levels, real estate data firm CoreLogic reported Monday, April 23.
Home prices have gone up steadily for six straight years, and most economists and analysts expect price gains to continue for at least another year or two.
“Both prices and (mortgage interest) rates are up. That’s the double-whammy we’re facing,” said Jordan Levine, a senior economist for the California Association of Realtors. “Affordability gets worse every time that prices go up.”
Rising prices coupled with a half-percentage-point gain in mortgage rates have boosted the typical mortgage payment by almost 12 percent from year-ago levels, CoreLogic reported.
“The 8.4 percent year-over-year gain … understates the affordability challenge many homebuyers face,” said CoreLogic analyst Andrew LePage.
Prices also hit all-time highs in Los Angeles, Orange and San Diego counties.
The typical Orange County homebuyer paid $725,000 in March, up $58,000 or 8.7 percent year over year.
The median-priced home in Los Angeles County sold for $585,000, a gain of $36,000 or 6.6 percent.
Even condos in those two coastal counties hit prices once thought unthinkable: $500,000 in Los Angeles County and $498,000 in Orange County.
San Diego County’s median home price rose to $550,000, a year-over-year gain of $35,000 or 6.8 percent.
Riverside County posted a median price of $375,000 – not a record but still the highest median for that area in more than a decade. Riverside County’s median was up 7.1 percent year over year.
San Bernardino County, the region’s most affordable housing market, posted a median of $328,000, up 7.5 percent.
Orange County agent Sue McAfee said buyers paid more than they expected, or can comfortably afford, in her four or five most recent transactions.
One client, a young family looking to buy a house, recently pulled out of the market because they couldn’t find anything under $600,000, while their lender won’t give them approval for any purchases above $500,000. The median price of an existing house last month was $778,500 in Orange County and $539,000 in Southern California as a whole.
“A family member gave them $100,000 to buy a home, and it wasn’t enough,” McAfee said. “It’s sad.”
Sales, meanwhile, failed to keep pace with year-ago levels.
CoreLogic reported 20,883 closed deals in Southern California last month, down 6.2 percent from March 2017 levels. Even though March had one less business day this year, sales still were down 2 percent, dropping to 949 transactions per day vs. 968 in March 2017.
Sales also were down in all six counties, with drops ranging from 3.3 percent in San Bernardino County to 8.1 percent in Riverside County.
Agents and analysts blame the drop on the lack of for-sale inventory. The region had just 600 more homes for sale as of last Thursday than a year earlier and 7,500 fewer than this time of year in 2015, according to ReportsOnHousing.com.
That’s leading to more bidding wars and pushing home prices higher.
“We’re still looking ultimately at a supply-and-demand imbalance,” said Levine, the CAR economist.
South Bay home shopper Bessie Coronado-Allen, 29, experienced the heartbreak of being on the wrong side of a bidding war. The newlywed and her husband were one of 12 bidders on the first house they tried to buy earlier this year.
“We weren’t the lucky ones,” said Coronado-Allen, a nurse who’s been living in a studio triplex to save money for a home purchase. “A house comes on the market and within a couple of days, it’s sold.”
Coronado-Allen was one of a steady stream of home shoppers who stopped by a Torrence two-story across the street from a railroad track late Sunday, April 22. The remodeled 95-year-old house went on the market last week for $689,000 and is likely to sell fast.
“I had a couple people say they’re going to submit an offer,” said Torrance-based agent Julie Lockwood, with Re/Max Estate Properties. About 40 people showed up to view the property over the weekend.
Renters Steve Song and his wife, Erica Kim, were among them, saying they’ve been looking for a house to buy in the South Bay for about a month.
Song bought a house in Mississippi in 2006, before moving to Southern California and getting married, and there were plenty of homes to choose from back then. Now he’s having a hard time finding homes in his price range.
“Our strategy, if we can’t find anything around here, is to go a little inland,” said Song, 39.
Los Alamitos house flippers Gilbert and Michelle Scales also are getting shoppers vowing to submit offers for their Lakewood remodel after just two days on the market.
Gilbert said he and his wife, an agent with Re/Max College Park Realty, paid $515,000 for the small, one-story house on tree-lined Bellflower Boulevard and spent $100,000 fixing the property up.
“Everything’s brand new,” he said.
They’re asking $729,900, or about $100,000 more than they’ve invested. They got $730,000 for a similar home 2 miles away two weeks ago, again after just two days on the market.
“We’re having a hard finding replacement homes to work on because prices are so high,” Gilbert Scales said.