In 2017, Los Angeles housing prices shattered records, reaching previously unseen heights and eclipsing prices seen in the run-up to the 2007 mortgage crisis.
Does that mean we’re in a real estate bubble?
Not necessarily. A recent report from Core Logic noted that prices across all of Southern California are still 13 percent below their pre-recession peak, when adjusted for inflation.
The company further predicts that prices in LA County will shoot up another 6.4 percent before the end of the year.
That may be “bullish” but it’s a lack of supply (rather than the risky lending practices which fueled the bubble a decade ago) that is keeping prices high.
There are just not that many homes on the market, and perhaps the strong rental market is encouraging some owners to hang on to their properties.
So far, a countywide median sale price well over $500,000 doesn’t seem to be deterring buyers. Demand continues to be very high, and home shoppers looking for anything under $1 million should be prepared for competition.
That said, there are indications that buyer interest in higher-end properties has begun to cool, and that younger buyers are fueling a particularly hot market for more “affordable” properties.
Lower end prices keep rising because there’s just too much demand.
But, how long will home values keep climbing? Trees can only grow so high and more and more residents are being priced out of the market.
And how does the middle class buy a house here?
The first step is don’t assume you can’t afford anything and the second step would be to sit down with a lender and find out what your purchasing power is – You may be pleasantly surprised.
But that doesn’t necessarily mean you should expect to land the home of your dreams. You may have to enter bidding wars and do a bit of extra legwork (researching the market and being prepared to jump at the right opportunity. ) And adjust some expectations, but remember; Your first home doesn’t have to be your last home.