There’s no longer a dark cloud looming over the unpredictable Southern California housing market. The clouds have parted and things are looking bright as we settle into summer. With homes sales up, all-cash and investor purchases down, and home prices sustainably rising, the housing market here in Southern California is settling into a more normal, healthy pattern.
Economists say that these factors put this regional housing market on a path for growth that could see some longevity. A report from CoreLogic also says homes sales show an 18.1% increase in June from a year earlier, while median prices rose 5.7% from June 2014. The sales increase is the largest in nearly three years and puts the number of sales just 9.6% below average. A year ago, sales were nearly 24% below average.
Sales and prices climbed in all six Southland counties: Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura. In Orange County, the median price rose 4.9% from a year earlier to $629,500. In Los Angeles County, prices climbed 8.7% to $500,000. Furthermore, the share of absentee buyers – mostly investors – fell to 21.1%, the lowest percentage since April 2010.
As the economy improves, more families are entering a market that is seeing a “real recovery” to buy houses they actually want to live in, according to Christopher Thornberg of Beacon Economics. People’s confidence to buy houses is also up because of sustained job growth – California added 54,200 jobs in May.
Southern California isn’t the only area experiencing this sunny patch in the housing market. Improvements extend nationally, with sales of previously owned homes up in May to the highest pace in six years. Contributing to this increase in home sales are the influx of first-time buyers into the market and buyers rushing to lock in historically low interest rates before the Federal Reserve is set to raise its short-term interest rate later this year.
However, Leslie Appleton-Young, chief economist for the California Association of Realtors, warns that the market still has too few homes for sale and that prices have risen to a point where many can’t afford a house. Housing affordability has become a big issue. But for now, deals are on the rise and people are paying more.
As most of us don’t want the summer to end, I’m sure we don’t want this positive upswing in the Southern California market to end either. Do you see the current market conditions continuing? How have you taken advantage of the current buyer confidence? We would love to hear your insights.
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