Median Home Prices for L.A. Homes Top Record

Do you know median home prices for L.A. homes broke the previous record in May 2017? The 2007 record for median home prices in Los Angeles County was $550,000. Last month the median home price in Los Angeles County finally reached a record breaking $560,500. It took a decade.

A recent report by CoreLogic, a real estate research firm, sheds light on the details. The median home price rose 6.8 percent year over year in May. Sales increased 4.8 percent. And how about the sense that home prices and interest rates will keep going up so buyers should get off the couch. After all, the high rents seem like a waste of money.

Why Now?

There are several contributing factors to the increasing home prices. Better jobs and low interest rates are two main factors. How about the competitive market? There is a shortage of L.A. homes for sale, at least in lower price categories. That is causing bidding wars for in-demand neighborhoods. Bidding wars drive up sales prices. Competition is so stiff that buyers are marketing themselves to appeal to the sellers and cinch the sale.

Can Buyers Afford these L.A. Homes?

Adjusted for inflation, today’s record is 11 percent below the 2007 record. The Los Angeles Times newspaper reports that only 9 percent of L.A. County households could afford the median-priced house at the end of 2006. Now 29 percent can afford it.

The Times also cited the Joint Center for Housing Studies at Harvard University. Almost 36 percent of homeowners in Los Angeles and Orange counties spent over 30 percent of their income on housing in 2015. Compounding the problem, almost 17 percent spent over 50 percent of income on housing. Thirty percent of income spent on housing represents a challenge to homeowners.

Some buyers won’t or can’t pay these high prices. They search other locales or hold out for something better. Others feel like they must move ahead or get left behind. The Times article explains:

“In the wealthy beach cities of Manhattan, Hermosa and Redonda, buyers are forging ahead, convinced that if they back out now, “It will only be tougher.”