Southern California median home price up 15% in September, sales jump as well

Southern California home sales and prices surged in September, the latest evidence of a hot housing market during the COVID-19 pandemic.

The six-county region’s median price rose 15.3% from a year earlier to a record $612,750 last month, according to data released Wednesday by DQNews.

Sales soared 22.3%.

The market, both locally and nationally, has been on the rebound since slowing sharply this spring at the height of the coronavirus stay-at-home orders.

Although unemployment is high, the economic downturn has disproportionately hurt lower-wage workers who are less likely to buy a home in the first place.

Real estate agents and analysts say many households with decent-paying jobs are eager to take advantage of historically low mortgage rates. And some want out of small apartments now that they work from home.

The number of homes for sale, however, is below last year’s level, and that’s helping push up prices.

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Business newsletter: How to buy a home during the pandemic

Mortgage rates are at historic lows, so there’s money to be saved there by buying a home now. But when it comes to the home’s sales price, don’t expect a discount because of the economic downturn.

Sept. 15, 2020

September was the fourth straight month the median hit a new all-time high, and the 15.3% increase from a year earlier was the largest pop since 2014.

The annual increase in August was also the largest since 2014.

“Buyers are out there, and there is a lot of competition,” said Selma Hepp, deputy chief economist at real estate firm CoreLogic.

Hepp and other analysts say the strong median price gains in recent months are partly driven by a rise in actual values as buyers compete, but those actual values aren’t necessarily rising by double digits.

Because the median is the point at which half the homes sold for more and half for less, it reflects a change in individual home values as well as the types of homes sold at any given moment.

So one thing that has made the median price rise so much, analysts say, is that members of higher-income households have been less likely to have lost their jobs in the pandemic, leading a greater share of home sales to be in the luxury segment now than at the same time last year.

CoreLogic releases an index that attempts to correct for such shifts in the types of homes being sold. For August, the most recent month available, the index shows home prices in Los Angeles County rose 5.3% from a year earlier. That compared with a 12.2% increase in the median price that month.

In September, here’s how prices and sales changed in individual Southern California counties:

• In Los Angeles County, the median sales price rose 14.5% from a year earlier to $710,000, while sales increased 19.9%.
• In Orange County, the median rose 8.6% to $785,000, while sales increased 29.8%.
• In Riverside County, the median rose 14% to $447,000, while sales increased 17%.
• In San Bernardino County, the median rose 12.8% to $397,000, while sales increased 26.4%.
• In San Diego County, the median rose 14% to $650,000, while sales increased 27%.
• In Ventura County, the median rose 12.9% to $665,000, while sales increased 32.1%.

Just how long the current upswing will last is unclear.

The increase in sales is being driven, in part, by purchases that probably would have happened last spring if not for stay-at-home orders, Hepp said.

And the sales and price data released by DQNews reflect closed sales, meaning escrow most likely began in August and July. In recent weeks, data from Redfin show fewer homes entering escrow.

The California Assn. of Realtors predicts less price growth in 2021.

According to a forecast the association released last week, the statewide median price of homes sold this year is expected to climb 8.1% from 2019, but in 2021 the group forecasts a much smaller year-over-year rise: 1.3%.

“The uncertainty about the pandemic, sluggish economic growth, a [potential] rise in foreclosures, and the volatility of the stock market are all unknown factors that could keep prices in check,” Leslie Appleton-Young, the association’s chief economist, said in a statement.