Trulia looked into home prices in Southern California recently to determine whether or not those prices are as yet back to pre-recession prices. In some cases, yes…in others, a resounding no. Trulia’s chief economist, Ralph McLaughlin, said, “Prices rise in strong correlation with incomes and in Southern CA, income growth has been only modest. That essentially means that prices can’t rise that much faster because, at some point, people won’t be able to afford these homes.”
Northern CA is another question, however. 98% of San Francisco’s home prices exceeded pre-recession highs last year. This year, San Jose and Oakland home prices are also up over bubble prices. In fact, Oakland’s current median home price is $620,000., higher than Los Angeles’s median home price of $585,000.
CoreLogic research analyst, Andrew LePage reiterates these sometimes yes, sometimes no scenarios in very specific locations. Los Angeles and San Diego home prices are still 5.5% lower today than they were pre-recession despite the fact that 37% of Los Angeles County and 23.5% of Orange County homes are priced above recession years. Truly, specific locations translate into specific neighborhoods. Riverside County and San Bernadino Counties underline this specificity with their home prices coming in at 23.6% and 28.9%, respectively, less than pre-recession prices.
Geoff McIntosh, president of the California Association of Realtors and agent in the Long Beach area, sees enormous differences in prices within each city itself. “Prime properties with proximity to good schools and beaches that had fallen to $600,000 are now back up to $2M. Properties that are not in prime locations continue to struggle.”
McIntosh and other experts agree that Southern CA will see a full rebound “…even if it takes longer…there’s still a lot of pent-up demand…I don’t believe…it’s likely that you’re going to see housing values level off because there’s (simply) not enough supply…” to meet that demand.
Even with things moving in the right direction in terms of home prices, there’s more to market health than home prices. Still pay attention to sales volume figures. The number of sales of homes in Southern CA at pre-recession peaks in 2005 was 355,698, according to CoreLogic. In 2016, that number was 244,179. As Trulia’s Ralph McLaughlin said up top, “…prices can’t rise that much faster because…people won’t be able to afford them…”