Los Angeles County median housing prices hit $510,000 in May, their highest point since December 2007, according to the LA Business Journal. Prices bottomed out around $300,000 in April 2009 and again in January 2012. So how'd they shoot up 66 percent in only about two and a half years? (One broker calls it "a harp and definite turn in the market, like a switch being turned on ... Everybody tried to jump back in all at once.") Mostly it was the arrival of fresh rich people: the tech boom on the Westside brought a crop of techies to town and foreign investors realized they could score sweet all-cash deals in Los Angeles. The bidding wars started in earnest in spring 2012 and "Most purchases were 100 percent cash. Mortgage lending standards were still very tight." Meaning anyone who couldn't afford to lay out all cash on a house was still SOL.
Predictably, the Westside and other "high-end, desirable markets" have benefitted most from this swift rebound. The high-end overall is only 10 percent off its pre-housing-crash peak, but the lower-end is 30 percent below the peak. That major imbalance is probably preventing any further bubbling ("The increases have recently slowed to the single-digit range."), because there are only so many buyers who can pay top dollar (especially now that it's harder to get a mortgage). As one broker says, "This recent price rise has brought the whole affordability issue back into the picture."
· Home Prices Cross Threshold [LABJ]
· Mapping the (Mostly Huge) Housing Price Jumps Across LA [Curbed LA]
· Some LA 'Hoods Now Pricier Than They Were Pre-Recession [Curbed LA]