Housing Prices in Southern California Have Soared Significantly
Good news for landlords, housing prices in South California have soared significantly in recent months. Clear figures indicate this positive trend.
The median price (that is, the price in which half of the assets were sold higher and half lower) in Los Angeles County rose by 7.4% ($525,000) in October. In Orange County, there was a rise of 9% ($655,000) in the same month. In Ventura County, there was a 7% increase ($535,000). In San Bernardino County, 9.6% ($285,000) in Riverside County 8.1% ($335,000) and in San Diego County 11.1% ($507,500).
This surge is a part of a trend that characterizes the whole nation as prices are now higher than their 2006 bubble peak. However, one should bear in mind that inland areas in California are not affected by this surge and prices remained relatively low.
How can we explain the rise in housing prices?
According to real estate experts, there are three main factors that account for the rising prices:
- The overall improvement in the economy during 2015-16.
- Low mortgage rates.
- Lack of houses for sales vis-a-vis increasing demand.
Most analysts agree that the steep price increase in October will not continue next year. First and foremost the rate wage growth will not be able to catch up with the rising housing prices. Fewer and fewer people will be able to afford a house with skyrocketing median prices. Second, and of equal importance, mortgage rate is expected to increase making it much more difficult for potential buyers to raise required capital for a purchase.
But we have to remember that the real estate market in southern California is experiencing growth. Price will most probably keep rising, though not at today’s rate. US economy is slowly recovering from the 2008-9 crisis and the real estate sector is reacting positively.