L.A. and OC County Home Prices Set All-Time-Record Highs

CoreLogic has reported that the median home prices for Los Angeles and Orange County have just hit new all-time highs due to spiking sales of homes at over $1 million.

CoreLogic, in cooperation with the Los Angeles Times and Orange County Register reported that the surging Trump stock market boom is pushing real estate prices to new highs by driving up sales of high-end homes.

Although the rise in California job growth and consumer confidence are contributing factors for higher real estate demand, their research reveals: “Higher stock market values can make potential home buyers feel wealthier and in some cases stock proceeds are reinvested in real estate.”

CoreLogic analysts found that there was an all-time-record of 10,562 sales of $1 million-plus houses, and 2,523 sales of $2 million-plus houses, in the January through March quarter, up 11.8 percent from the same period in 2016.

With the stock market hitting new multiple new all-time-highs in the last two months, the Times reported that the median price of a Los Angeles County home in May rose by 6.8 percent, to a new record of $560,500, on a 4.8 percent sales volume increase from last year. The Times stated that local real estate players claimed spiking prices were due to the improving economy, rather than speculative activity that caused the 2008 crash.

The Register reported that the real estate boom was even hotter in Orange County where the median price spiked to $695,000 in May. That was up $20,000 from the prior month, and up $43,500, or 6.7 percent, from the same time last year. But the sales volume in the “OC” rose by just 1.9 percent.

CoreLogic research analyst Andrew LePage told the Register that Orange County median home prices have climbed for 61 straight months, from a low of $260,000 in April of 2012. But LePage warned that the biggest challenge to housing affordability is the impact of a one-half-point rise in mortgage rates, which has driven up mortgage payments by 12 percent. As a result of higher interest rates, refinance credit scores have fallen by 9 points.

But CoreLogic estimates that a major difference in the current national real estate boom, versus the 2002 to 2007 boom, is that homeowners have not been speculatively borrowing out of  their homes’ appreciation. According to the latest CoreLogic Homeowner Equity Report, homeowners’ equity has doubled in the last 5 years, to nearly $8 trillion.

CoreLogic also found that only about 4.3 percent of homeowners in the United States are 30-days behind in their mortgage payments, and fewer than 1 percent are in foreclosure proceedings, as of March 30.

CoreLogic’s Home Price Index Market Condition Overview currently rates Los Angeles County as “Normal,” but Orange County is rated “Overvalued.” The only other counties in California that are rated “Overvalued” are San Diego, Santa Barbara, and the four Bay Area counties that are often referred to as Silicon Valley. Riverside, San Bernardino and a couple of Central Valley counties are rated as “Undervalued.”