Yay! L.A.'s Crazy Home Prices Are "Losing Steam"
Average income earners in L.A. can't afford to buy an average house in this market, plain-and-simple. A spring report found that Angelenos with a median household income of $53,284 could only realistically afford to buy a $276,000 home. And good luck finding one of those around here. In fact, a median household income will barely get you an average two-bedroom apartment in L.A.
But the news on the housing front might be improving. We recently told you that an increasing number of homes were coming to market. And now, a report released today by real estate data site RealtyTrac says prices are starting to cool off in L.A.
But before you get excited, keep in mind that they're cooling off from white-hot highs. And they're still increasing—just not as much as they were in the last year or so.
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While the L.A.-Long Beach-Santa Ana metro area had a top-10-in-America "home price appreciation" rate of 24 percent last year, this year that rate has gone down to a relatively mellow 9 percent, according to RealtyTrac's latest "Residential and Foreclosure Sales Report:"
In fact, California represented the cool down well, according to RealtyTrac:
Some of the fastest-appreciating markets in 2013 have seen substantial slowdowns in price appreciation this year, including Phoenix (6 percent annual appreciation in October 2014 compared to 25 percent a year ago), Los Angeles (9 percent annual appreciation this year compared to 24 percent a year ago), Oxnard-Thousand Oaks-Ventura in Southern California (7 percent annual appreciation this year compared to 24 percent a year ago), Jacksonville, Fla. (4 percent annual appreciation this year compared to 23 percent a year ago), Boston (3 percent annual appreciation this year compared to 21 percent a year ago), and San Diego (8 percent this year compared to 19 percent a year ago).
Why? Well, RealtyTrac VP Daren Blomquist says inventory is key:
... As the lower-priced, often distressed inventory most appealing to investors dries up in a given market, investor activity will slow down in that market and move to other markets with more ideal inventory available. This has created a ripple-effect recovery moving out from traditional investor hot spots such as Phoenix, Atlanta and many California markets ...
Still, the firm says the median price of a home in greater L.A. in October was $492,000, and even at that rate we're often talking about Ugly Bettys outside the core L.A. basin, fixer-uppers that most Angelenos can't afford in any case.
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