The price of homes sold within Southern California have jumped 24.7% since last year marking the highest May peak in seven years. DataQuick reports that the total number of homes sold has reached 23,304, a 3.8% increase from last year.
A combination of low inventory, increased demand, low interest rates, and all cash purchases have spurred this spike. Fierce competition for a shrunken inventory has stoked the fires of a bidding war.
Worries of another bubble loom, however experts foresee a future increase in inventory as home prices rise and more homeowners and builders list their properties for sale. Additionally, experts point towards a stabilized market in the near future, around late fall or early winter. Rising mortgage interest rates coupled with a lack of strong wage growth, would cap market demand level and keep housing prices from surging further.
Homes in Los Angeles, San Bernadino, Riverside, San Diego, and Ventura reached a median home price of $410,000, a 30.2% spike compared to May 2012.
This recent spike is still 27.1% below the respective high of $505,000 in May of 2007.
Although Dataquick points out that most of May’s increase was due to a general appreciation in overall market value, approximately one-quarter of homes sold were over $800,000.
Compared to May 2012, sales for homes between $300k and $800k increased 30.3% while homes selling for over $800,000 increased by 46.7%, and homes selling for less than $300,000 declined.
Distressed properties sales represented only 10.8% of all resold homes, a decline from 26.9% last year.
We’re halfway towards our last recessionary pre-cursor. Does trouble loom ahead or will a future influx of inventory keep the Los Angeles housing market stable?
What are your thoughts?
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