California housing prices are once again on the rise and so far, researchers are unsure of when this surge will come to a halt.
In a CoreLogic report, it was discovered that prices for single-family homes, both attached and detached, climbed 5.8% between May 2016 and May 2017. In Los Angeles County alone, a 6.4% spike was recorded; almost reaching the nationwide increase of 6.6%.
With such a significant inflation occurring in the housing market, many bewildered, potential home buyers are left contemplating the time it will take to find a single-family home that fits comfortably in their budget.
Rising Prices Across The State
Although Los Angeles County has seen a major surge in housing prices, many other areas throughout Southern California have experienced far more serious price inflations.
Shown below, are the current median prices of single-family homes throughout a few cities in Southern California that have gone through a price spike within the last year:
- Beverly Hills: $3,057,700; 3.6% increase
- Bel Air: $3,278,000; 2.8% increase
- Brentwood (90049): $2,398,800 ; 2.1% increase
- Echo Park: $810,400; 8.7% increase
- Hollywood: $749,600; 3.9% increase
- Los Feliz: $1,459,900; 6.3% increase
- Malibu: $2,906,700; 5.3% increase
- Pacific Palisades: $2,738,800; 7.3% increase
- Santa Monica: $1,405,200; 2.2% increase
- Sherman Oaks: $895,300; 7.4% increase
- West Hollywood: $737,500; 4% increase
Prices Projected to Rise Into Next Year
In correspondence to the price hike in the cities listed above, CoreLogic predicts that California will experience another 9.7% increase by the time May of 2018 arrives. CoreLogic President and CEO, Frank Martell, determined that the culprit of the massive price surge was the shortage of available homes on the market. Unfortunately, housing developers aren’t constructing enough homes to match the increasing demand and many fear this pattern won’t right itself anytime soon.
How The Spike Affects California Residents
Both the shortage of homes and rising housing prices have resulted in serious drawbacks for renters and first-time home buyers due to the fact that rental inflation is surpassing income growth and therefore, affecting affordability.
However, for current homeowners, the hike in housing prices has proven to be less detrimental; the inflation has actually facilitated a boost in home equity.
Along with increased home equity, the housing market surge has also brought on a new trend for luxury apartments. A recent report from RENTCafe.com elucidates the relation between the shortage of homes and the spike in construction of future apartment complexes. Between 2010 and 2016, downtown Los Angeles became a city with the second highest number of new-construction apartments. Currently, 63% of total units are located in the core of Los Angeles.
So far, experts believe the housing surge will continue to expand if the availability of homes for sale continues to be limited.