Listening to Pandora one night, a commercial came on that grabbed my attention. Why? The commercial for a real estate development stated young families just starting out are now able to afford their dream homes priced just under $1 million. Being from North Carolina, I had to chuckle. Running an LA based real estate appraiser company, I concurred, as the median home price for an LA County home now ranges about $600K and continues to soar in 2018.
In Southern California, mortgage payments are up more than 15 percent since last year. To wait or not to wait? Well, it’s not getting any cheaper to buy a home in Los Angeles County as prices have leapt up 3.2 percent in May, according to a new report from real estate tracker CoreLogic.
Since February, the county’s median home price bested an all time record. It now stands at $609,000, nearly $20,000 higher than a month ago. Prices were also up 8.4 percent over a year ago, and May was the first time ever that the LA median topped the $600,000 mark.
Home sellers are making huge profits. So why aren’t more people selling? According to CoreLogic analyst Andrew LePage, fewer homes are on the market than usual, and the number of overall sales is down 4.2 percent since May of last year. LePage says the dramatic increase in home values over the last year “tells only part of the story of waning affordability, where housing costs have outpaced income gains.”
That’s because mortgage interest rates have increased roughly 0.5 percent in that time, inflating monthly costs for buyers. LePage points out that mortgage payments across all of Southern California have grown about 16 percent over the last year, making things especially tough for buyers with limited finances available. This can be seen as the number of new homeowners making use of government-backed FHA loans for first-time buyers is down significantly since last year.
Across all of Southern California, these loans were used in 18.6 percent of home sales in May of 2017. Last month, that share was down to 12.9 percent.
But back to my story about the commercial that made me chuckle. On the flip side, region-wide sales of homes priced over $1 million are up nearly 8 percent since last year. The market is steep in Los Angeles, but we are still much more affordable than San Francisco’s median house price of $1.61 million and way behind the average sales price in Manhattan which fell below $2 million for the first time in nearly two years.