Southern California home prices jump 12% to record high $600K
A summer resurgence of home buying stretched into August, defying the pandemic to set record home prices and drive sales to a near two-year high, new housing figures show.
The median price of a Southern California home — or price at the mid-point of all sales — was $600,000 last month, up 12.1% year over year to a record high, CoreLogic/DQ News reported Wednesday.
Prices also set records in five Southern California counties and tied the record in the sixth.
Driven by a pandemic-induced demand for bigger homes, Inland Empire medians finally reached pre-recession highs set during the 2006-07 housing bubble.
Riverside County's median was $441,000 last month, surpassing a record set in December 2006. In San Bernardino County, the median home price hit $380,000, tying the November 2006 record.
Prices in Los Angeles, Orange, San Diego and Ventura counties all set records as well.
Meanwhile, 22,603 houses, condos and townhomes changed hands in August, up 2.4% from a year earlier. It was the second straight month of annual sales gains following three months of massive drops.
Home prices are surging across the state, with year-over-year gains in all but two California counties and 33 counties showing gains of 10% or more, the California Association of Realtors reported Monday. The statewide median for an existing single-family home jumped 14.5% to an all-time high of $706,500 — the first time the statewide median house price exceeded $700,000.
A soaring housing market seemed counter-intuitive in a world of face masks, empty ballparks and elevated COVID-19 infection rates.
Southern California's economy recovered just 27% of the jobs lost in the pandemic lockdown, and August's unemployment rate held at 14%, compared with 4.1% in February, state figures show.
But rock-bottom interest rates and a lack of homes for sale "put notable pressure on home prices," economists said.
"August home sales continued to reflect a recovery in housing demand following the lost spring home-buying season," said Selma Hepp, CoreLogic's deputy chief economist.
Interest rates for 30-year fixed mortgages hit record lows six times since late June, dropping as far as 2.86% this month. That, in turn, boosted home shoppers' buying power.
At the same time, the number of Southern California homes for sale fell to 26,508 homes, down 39% from a year ago to the third-lowest rate in seven years, according to Reports On Housing.
One reason for the lack of supply is homeowners in spring feared the market would tank, said Ralph McLaughlin, chief economist for Haus, a co-investment platform for homebuyers. Now that demand is booming, it's too late for sellers to jump into the market if they have school-age children.
"You have demand rising because of (low) interest rates at the same time supply has come down," he said. "That's created a perfect scenario for price growth to accelerate to levels no one would have thought possible during a pandemic."
McLaughlin also noted that the pandemic hit renters much harder than those who are in the market to buy.
That created "a tale of two housing markets," a booming for-sale market and a floundering rental market, he said.
Another factor pushing August prices higher was sales of higher-priced properties recovered faster than the rest of the market, skewing the median price upward, the Realtor association reported.
"A change in the mix of sales is another variable that keeps pushing median prices higher," said CAR Chief Economist Leslie-Appleton Young.
Here's a breakdown of CoreLogic's latest numbers by housing type and by county:
Single-family houses: 15,888 sold in the six counties, up 2.5% in a year. The median selling price was $640,000 — a 14.3% increase over 12 months.
Condos: 5,063 sales across the region, up 7.8% over 12 months. The median selling price was $500,000 — a 9.2% increase in a year.
Newly built: Local builders sold 1,652 new homes, down 11.8% in a year. The median selling price was $581,000 — a 5.6% increase over 12 months. New homes accounted for 7.3% of Southern California home sales vs. an average of 13.4% between 1988 and 2018.
Los Angeles County: 6,834 homes sold, down 3.8% over 12 months. The median selling price was $692,750 — a 12.2% year's increase.
Orange County: 3,559 homes sold, up 10.9%. The median selling price was $800,000 — an 11.6% increase.
Riverside County: 4,013 homes sold, up 0.6%. The median selling price was $441,000 — a 13.1% increase.
San Bernardino County: 2,984 homes sold, up 2.8%. The median selling price was $380,000 — a 9.8% increase.
San Diego County: 4,122 homes sold, up 7.2%. The median selling price was $640,000 — a 9.4% increase.
Ventura County: 1,091 homes sold, up 7%. The median selling price was $647,250 — an 8.1% increase.