The Southern California real estate market is stronger than ever, so much so that the ongoing surge pushed median home prices in the region to $505,000. It has been more than 10 years since the last time the Southern California real estate market achieved such lofty heights, so much so that the previous high actually predate the recession. Fortunately, the economic conditions that crashed the market — and made the median home prices of a decade ago so unsustainable — do not exist today.
Several of the geographic areas comprising the Southern California real estate market are exceptionally healthy, with Los Angeles County and Orange County exceeding the previous peak in median home price by significant margins. In Los Angeles, the median home price of $575,000 represented an increase of 9.5 percent over the previous year and easily outperformed the pre-recession mark of $550,000. Orange County posted an 11 percent increase in the median home price with an average of $710,000, well over the $645,000 the area boasted back in 2007.
With a greater level of economic stability on the both the local and national level, there is far greater confidence in real estate markets across the United States. In 2007, the increase in home prices was a product of the risky lending practices that ultimately sent the economy into a tailspin. More than a decade later, rising home prices can be attributed to a stronger, more sustainable economy committed to learning from and preventing the disastrous mistakes made in the past.
Of course, the rise in the median home price in Southern California has created several complications that must be addressed sooner rather than later. When costs rise, accessibility to affordable housing is sure to become an issue. Given the short supply of homes — not to mention the influx of Californians displaced by the wildfires in the northern part of the state — legislators are already taking action to ensure the availability of affordable housing throughout the Southern California region.
There is also some concern that the strength of the real estate market is discouraging out-of-state workers from accepting job offers that require relocation, and many have noted that job growth has indeed slowed statewide. With the goal of attracting new workers while also encouraging current residents to remain, lawmakers have worked quickly to pass several bills addressing the housing shortage, particularly with regard to the shortage of affordable housing options.
Given the present rate of state and national economic growth, most economists agree that the solutions enacted by state lawmakers should not impede the health of the real estate market in Southern California. As a result, the majority of analysts expect that the Los Angeles region will again be one of the nation’s top real estate investment and development performers in 2018.