High demand and low home production rates are pushing up Southern California home prices well past affordable levels.
The Los Angeles Times reports that prices jumped 7.5 percent in August from the year before, reaching a median price of $500,000 across the six-country region. Home prices in Los Angeles County rose 9.4 percent on an annual basis last month to a record median price of $580,000.
The findings come from a report by CoreLogic, which notes that this was the strongest August for Southern California home sales since 2006. Sales increased 13.3 percent from July.
Richard Green, director of the USC Lusk Center for Real Estate, said to the L.A. Times that Los Angeles County is short 100,000 housing units right now. The county needs to add as many as 35,000 homes a year to keep up with demand, but only 25,000 units are being built annually.
Home prices in the region can’t keep rising 7% a year and will probably moderate to between 3% and 5% annually for the foreseeable future, Green said. … “Unless there’s some existential event like a nuclear missile hurled in our direction,” he said, “I don’t know why prices are going to fall any time soon.”