In early 2013 we saw prices leap at record rates, but as we neared 2014 things seemed to slow for much of California, as well as the rest of the country. This was largely due to a major reduction in investor activity, reducing the competition among buyers, as well as significant bumps in mortgage rates paired with what were some of the highest prices seen in years. Most recently though, we’ve begun to see more signs of a slowdown in home prices throughout Southern California, leaving many experts asking the question, has the SoCal market topped out?
According to a recent study by Trulia, asking prices grew at their slowest pace in nearly two years in Los Angeles County in June, and in Orange County they were practically flat.
Trulia’s Price Monitor recorded 1.2% growth in the typical asking price of a house in Los Angeles County in June, compared with three months prior. In pricier Orange County, that asking price climbed just four-tenths of one percent, the smallest gain since prices started rising in Orange County in May 2012. By comparison, in the first half of 2013, prices were climbing roughly 6% a quarter.
Trulia’s study focuses on asking prices – a forward-looking indicator – but its findings echo a slowdown in sale prices in recent months as well.
This shift in the market has come as sharp home price growth has bumped up against relatively flat incomes and still-tight lending standards. Southland markets routinely rank among the nation’s least affordable on measures of housing costs as a share of household income, and market-watchers here say they see many potential buyers priced out after last year’s big run-up.
Asking prices climbed faster in the less-expensive Inland Empire, up 2.4% in the last three months. But even there, the market is throttling down. The Inland Empire recorded 7%-per-quarter price growth last summer.
While there are still many promising signs that the market will continue to improve, this standstill is certainly something to be watched throughout upcoming months.
Do you think Southern California has hit a peak in prices, or is this just a temporary slowdown? What are your thoughts?
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