In a year that has been filled with fast and furious home price increases it seems the Southern California housing market has plateaued so as to allow for further growth in 2015. With home prices up and mortgage rates down, many market watchers had high hopes for home sales at the close of the year, however it seems the sluggish sales trends set in summer and fall will carry over into the beginning of winter.
According to CoreLogic DataQuick, an Irvine-based real estate analytics firm, home sales in the six-county Southern California region are on pace to fall 10 percent in 2014. In November the median home price for the region was $412,000, virtually unchanged from October but up 7 percent from the same time last year.
The single-digit increase in price was a welcome reprieve from hefty double-digit gains seen earlier in the year, however it seems the damage has already been done to keep traditional buyers off the market. The number of homes sold in November was near a 25-year-low for the month.
After heavy investor activity in 2013, many economists saw 2014 as the year that traditional home buyers would come back to the market in droves, however home prices continued upward and out of reach for many.
“We kind of got the signals wrong. A lot of people did,” said Leslie Appleton-Young, chief economist for the California Assn. of REALTORS®, to the Los Angeles Times. “The economy is doing better and [mortgage interest] rates are still really low, but it looks like housing affordability is keeping a damper on things.”
Hope for the Southern California housing market remains high for 2015, however. As the economy continues to improve and people start making more money, home buyers could be coming back to the market in no time. The California Association of REALTORS® predicts home prices will grow by 5.2 percent next year, the slowest pace since 2011, but the most manageable for home buyers.
Southern California Luxury Homes Offer Bright Spot
While the sluggish pace of the regular housing market has been making headlines, so has the speedy pace of the luxury housing market, particularly in Southern California. CoreLogic DataQuick also reported that luxury home sales in Southern California are hitting highs not seen in decades for homes costing $2 million or more.
The firm reported a record 1,436 homes priced at or above $2 million were sold throughout the six counties of Southern California in the third quarter of 2014. This was up 14 percent from the same time period of 2013.
Many have attributed the money filtering from wealthy foreign investors as the main factor behind luxury home sales growth, however thanks to a booming stock market, native investors have been able to put down roots in Southern California as well. Throw in low interest rates and a large number of builders and remodelers who are recognizing the value in luxury homes and the luxury market looks to be in good shape for 2015.
If you are interested in learning more about luxury homes in Santa Monica, please contact our team of luxury property agents today.