Southern California home prices and sales jumped in January from a year earlier, a sign buyers rushed to purchase a home as mortgage rates rose following the presidential election.
Sales in the six-county region rose 5.4% to reach the highest level for a January in four years, real estate data firm CoreLogic said. The Southland’s median price for new and resale homes increased 5.3% from January 2016 to hit $455,000.
The price gains add to a four-year-plus stretch of a rising market, a result of a strong job market, low mortgage rates and a shortage of homes for sale.
The strong January sales numbers mirror the national housing market, where Americans last month purchased previously owned homes at the highest rate in a decade. Analysts said a jump in mortgage rates following the election might have spurred some buyers to close a deal faster, fearful rates would rise further.
Last week, the interest rate on a 30-year fixed mortgage averaged 4.16%, according to mortgage giant Freddie Mac. That was up from 3.54% in the week prior to the election, though down from a high of 4.32% at the end of 2016.
Rates have risen as investors believe President Trump’s promised cuts in taxes and new infrastructure spending could lead to stronger growth and higher inflation.
Despite the recent strong sales, there are questions over how long price increases can last, particularly if mortgage rates continue their upward climb.
Southern California’s median price, for example, fell 3.2% from December, despite being higher than a year earlier.
The median — the point where half of homes sold for more and half for less — also is below the $465,000 level reached in June, which was a nine-year high at the time.
The dip could signal the market is nearing a peak.
Prices have climbed far faster than incomes in recent years and as of the end of last year, only 31% of Californians could reasonably afford the median price house in the state, according to the California Assn. of Realtors.
Or the recent dip may be normal seasonal fluctuations given there is usually less demand during the fall and winter months. CoreLogic analyst Andrew LePage said the 3% decline from December was in line with historical norms. Sales also declined from December, as is normal.
A clearer picture will emerge in coming months, during the typically busy spring home buying season.
“Historically, [January and February] are not good indicators of how the market will shape up during the rest of the year,” LePage said in a statement.
On a 12-month basis, prices rose in all six counties tracked by CoreLogic.
In Los Angeles, the median climbed 7.1% to $525,000; in Orange County, 2.6% to $635,000; in Ventura County, 2.2% to $510,000; in San Bernardino County, 6.8% to $283,000; in Riverside County, 6.5% to $330,000; and in San Diego County, 7.0% to $495,000.