According to The Mortgage Reports, Home prices climbed last quarter, to levels not seen since late 2006. Southern California is no exception.
International Business Times reported, “A median priced home cost $465,000 in Southern California this November, up 5.9 percent from last year. Prices went up in every county. In Los Angeles county, the median price climbed 8.4 percent, the largest rise of any of the six Southern California counties, to $530,000. The most expensive homes overall were in Orange County, with the median price rising 5.9 percent to $660,000.”
The Los Angeles Times reported that while the prices are going up, sales are going down and this could have something to do with higher mortgage interest rates, “The Southern California median home price has now risen, year-over-year, every month for more than four years. The strong gains have some in the real estate industry wondering how much further prices can climb. Housing values’ rise has far outpaced income growth in recent years, and mortgage interest rates have risen since the Nov. 8 presidential election, driving up monthly payments.
The Mortgage Reports also reported on the impact of rising mortgage rates, stating, “Rising rates might pull the brakes on seemingly unstoppable home prices. Home values have been catapulted upward by almost-free borrowing. Home buyers were getting 30-year fixed rates in the low 3s, and fifteen year rates solidly in the 2s.”
Dana Kuhn is a lecturer at the Corky McMillin Center for Real Estate at San Diego State University and she stated in an interview with the Los Angeles Times that the prices would surely rise, “The peak value in any given cycle has always exceeded the peak value in the previous cycle. So there was no question in my mind — even during the depths of the downturn — that we would get back to peak [price levels] because we always have. It’s only a question of how long it takes to get there. Of course it took quite a long time this time because [the recession] was so bad.”
As home prices rise, house-flipping is seeing a comeback. According to MarketWatch, investors are making much higher profits, “Investors are making an average profit of about $61,000 on each flip, up from about $19,000 at the bottom of the market in 2009.”