It’s official: Home prices in Los Angeles County have never been higher.
Still, the growth of home values has slowed since last year, when price records fell in every month of the summer. May’s median sale price was just 1.7 percent higher than it was 12 months earlier. At that time—May 2018—prices were more than 8 percent above where they were the year before.
Across all of Southern California, the median sale price grew just 0.2 percent in the last year.
CoreLogic analyst Andrew LePage suggests the slower rate of price growth may have a lot to do with the fact that home values are entering uncharted territory.
“The flattening out of home price growth reflects the erosion of buyer affordability after years of rising home prices and last year’s run-up in mortgage rates,” he writes in a monthly report.
Many buyers, says LePage, may be waiting for a drop in prices before purchasing; others may simply be priced out of the market.
If would-be home shoppers are choosing not to buy, that could explain underwhelming sale numbers in the last year. In Los Angeles County, 7,095 homes old last month—nearly a 3 percent decline from a year earlier.
Across all of Southern California, home sales have dipped on a yearly basis in each of the last 10 months.
LePage says such a lull is to be expected:
“Sixteen years ago, a few years before the last cycle’s peak, the market might have experienced a similar slowdown had it not been for the widespread availability of very risky home financing that let buyers stretch to their financial max.”
When some buyers began to default on those loans, the financial fallout helped to plunge the nation into recession.
The real estate market typically heats up during the summer months, and the numbers in the CoreLogic report suggest low interest rates may be steering buyers back to the market once more. Though the number of homes sold in May was down year-over-year, it was up 10 percent since April.