House prices in Southern California, which is one of the biggest and most expensive property markets in the entire world, have reached a four-year peak. The median sale price of a home in Southern California reached $315,000 in September ? a rise of 12.5% ? according to a new report from real estate research company DataQuick. This news comes at the same time as available housing stock in South California continues to decline. Although prices are high, the affordable housing stock has shrunk with foreclosures hitting a low of nearly five years, reaching 16.4% of sales.
Stocks are down to between 40% and 50%, according to the chief executive officer of brokerage company Redfin, Glenn Kelman. He remarking that "depending on where you are in LA... people are going crazy - they can't find anything to buy!"
"The latest stats suggest unbelievably low mortgage rates and modestly higher consumer confidence continue to put pressure on a supply starved housing market," is the sobering analysis from John Walsh, the president of DataQuick, who also predicts that the market will rebalance with more supply becoming available in order to meet the rise in demand, albeit conceding that this could take several months to actually take place.
There is currently a particular shortfall of lower priced homes that are appealing to first time house buyers. Real estate website Zillow says that the number of lower priced homes across California has decline by over 40%, which suggests that the 40% to 50% stock fall noted by Redfin is in this price range. Lower priced homes are defined as those that are sold for $313,000 or under, making the median house price in South California the cut-off point. Increased pressure on this particular market area may be part of the reason for the decline.
