Home prices in parts of Southern California are at record highs — and keep rising


http://www.latimes.com/business/la-fi-home-prices-20170725-story.html


Southern California home prices have hit record highs. (July 26, 2017)
By Andrew Khouri




In many corners of Southern California, home prices have hit record highs. And they keep going up.
In
Los Angeles County, the median price in June jumped 7.4% from a year
earlier to $569,000, surpassing the previous record set in May. In
Orange County, the median was up 6.1% from 2016 and tied a record
reached the previous month at $695,000.

Across the six-county
region, the median price — the point where half the homes sold for more
and half for less — rose 7.5% from a year earlier and is now just 1% off
of its all-time high of $505,000 reached in 2007, according to a report
out Tuesday from CoreLogic.

The price increase was even greater
than the 7.1% rise recorded in May, and some agents say there are no
signs of a slowdown in the Southern California market.

“This time of the year, it usually winds down a little bit after the
Fourth of July — I am not seeing that, ” said Hooman Zahedi, a Redfin
real estate agent in the San Fernando Valley.





Home prices have now been rising for more than five years, the result
of a growing economy, rock-bottom mortgage rates and a shortage of
homes on the market.

Those factors have led to a surge in prices nationally as well.

The
Case-Shiller index, also released Tuesday, showed prices across the
country jumped 5.6% in May from a year earlier. The index lags other
price indicators, but is widely considered the most reliable read on
home values and offers a more accurate depiction of where the market is
headed than the median price.

It
does so by comparing the latest sales of detached houses with previous
sales and accounts for factors such as remodeling that might affect a
sale price over time.

The rate increase nationally in May was the same as it was in April,
but locally the index showed a pickup. Across Los Angeles and Orange
counties, prices rose 5.59% from a year earlier, the highest gain since
September 2016.

Economists said that absent a recession or a
surge in mortgage rates, California home prices could keep climbing at
5% a year for the foreseeable future.

That’s faster than the
long-term average of 3% nationwide, but it’s difficult to build housing
in California and the economy is strong, said Richard Green, director
of the USC Lusk Center for Real Estate.

“It could go on for another four or five years,” he said.


The price surge nationwide is helping many homeowners recover from
the housing bust, but is also raising concerns over affordability —
particularly in California, where as of 2015 about a third of
homeowners paid housing costs deemed unaffordable, according to an
analysis from Harvard University’s Joint Center for Housing Studies.

Renters
have it worse, the analysis showed, with more than half paying more
than 30% of their income on housing costs — the threshold where costs
are typically considered a burden.

The situation in California —
which many agree has reached cr**** levels — can largely be blamed on a
mismatch of supply and demand, according to economists. For decades,
they say, developers in California have failed to build enough homes for
all the people who live — and want to live — in the state.

Green
estimated that developers would have to immediately erect 100,000 new
homes in L.A. County for prices to stop rising and then build an
additional 35,000 each year. Last year, the county permitted just under
20,000 new homes, according to the Real Estate Research Council of
Southern California.

Government officials say they are trying to take steps to address the problem of affordability.


In Los Angeles, Mayor Eric Garcetti
is advocating for a fee on new development to raise money for
below-market housing — a policy known as a “linkage fee” and used in
cities such as San Francisco, San Diego and Oakland.
And in Sacramento, Gov. Jerry Brown and legislative leaders have said they will put housing at the top of their agenda when they return in August from a monthlong break.

Legislators
have proposed a package of bills aimed at raising money for subsidized
housing and making it easier for developers to build all kinds of
housing, which often faces pushback from residents concerned over
traffic and nei***orhood character.

The bills won’t be easy to pass though, despite Democrats holding supermajorities in both houses of the Legislature.

Business-friendly
Democrats are wary of asking Californians to pay more to subsidize
housing, especially after voting this year to increase gas taxes and
reauthorize the state’s cap-and-trade program. Progressive Democrats
have concerns about sidestepping environmental laws to allow developers
to build more quickly.

CoreLogic’s report showed that home prices in Southern California
rose in every county last month compared to a year earlier, not just in
Orange and Los Angeles counties.

In San Bernardino County, the
median was up 12.3% to $320,000; in Riverside County, 7.5% to $357,000;
in Ventura County, 2.7% to $565,000; and in San Diego County, 9.8% to
$543,500. Across the region, sales rose 4.3%.


Chris Thornberg,
founding partner of Beacon Economics, said he doesn’t expect a recession
and thus doesn’t foresee a time when home prices stop rising.

“Candidly,
the only thing that could upset the apple cart in California is if we
build a whole bunch of housing and that’s as likely as an alien attack.”




Times staff writer Liam Dillon contributed to this report.