With California claiming 5 out of 10 spots on the Forbes’ list of America’s Top 10 Priciest Zip Codes, it’s no secret that the beautiful city of LA boasts some of the most luxurious homes in the country–and the most expensive, too. Since the housing market crash in 2008, researchers have noted that LA has not returned to its pre-recession prices and has continued to rise each year. Real estate researchers believe that this continued climb in housing prices is due to the shortage of houses on the market in addition to the deficit of credit availability for those looking to buy. With this constant rise, researchers are wondering how high the prices will get until they start to reverse again.
Consistent Rises in L.A. Home Values
According to Inman, the median prices for homes in the area of LA have been on the rise for 62 consistent months. Real estate researchers claim that this climbing trend appeared right around the end of the US’s recovery period from housing market crash (Source). 5 years ago, right before the hike in housing prices commenced, the median price for a single family home in LA was valued at approximately $398,600–depending on the area of LA in which you were looking to buy in. Nowadays, the mean price for a home in the luxurious city of LA is nearly double that. Currently, the median price of a home in Orange County is over $700,000, while the famed Beverly Hills has homes for sale that far exceed the price tag of one million. At this time, small, ‘starter homes’ in Beverly Hills start anywhere north of $1.5 million, while sumptuous estates can reach to a staggering $195 million.
Main Factors Contributing To Rising Prices
- Lack of credit availability: Before the housing market crash, the availability for housing credit could be found anywhere you go–a major pawn to the pop of the housing bubble. Currently, it’s much harder to get approval for a mortgage and requires much more from potential buyers. Of course, this lock-down in mortgage procedure only helps to ensure that buyer won’t purchase homes that they can’t–and will never–be able to afford.
- Lack of homes on the market: Currently, the demands for homes are quite high, making it much harder for families to easily come across a home. Unfortunately, the turn around rate for homes sold to homes for sale is not in sync. With many people looking to buy but not enough houses on the market to keep up with the demand, it’s causing the prices of homes to skyrocket.
- Pre-recession prices are still a thing of the past: Since the time of the recession, LA homes have not renewed to its pre-recession prices. This means that many homeowners are not willing to sell if it means that they won’t get the true value of their home.
For now, researchers believe that the prices of LA homes are only going to continue to grow for at least another 2 years, possibly even longer. However, real estate experts have noted that there are a few signs that are pointing to a close end in this hike in prices.