“Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.
Buzz: Southern California pandemic-fueled home prices are soaring at a pace not seen since the early days of the real estate rebound from the Great Recession.
Source: Trusty spreadsheet analysis of DQNews/CoreLogic homebuying data, April vs. history dating to 1988.
The Trend
The median sales price for the six-county Southern California region was a record $655,000 in April, up $60,000 in just three months.
That means the typical home here appreciated at a rate of $1 every 2 minutes in the February-to-April period.
Yes, this a prime buying season, so prices do jump — on average 5% in the three months ending in April since 1988. This year was the bump was double at 10%!
How rare is it? Only 10 times in 34 years have we seen larger price pops.
And the last time we saw a swifter upswing?
Well, there was the 11% spurt early in the pandemic era back in August — so COVID-19 spawned two of the largest spikes over 34 years. But before coronavirus was a household name, a larger increase was last seen in June 2013.
The dissection
Let’s consider the three-month gains through April at the county level, ranked by the size of the price jumps.
San Diego: Record $700,000 median, up $60,000 in three months. That 9.4% gain has been topped 11 times since ’88.
Orange: Record $872,750 median, up $73,750 in three months. The 9.2% gain has been topped 10 times since ’88.
Los Angeles: Record-tying $750,000 median, up $60,000 in three months. The 8.7% gain has been topped 20 times since ’88.
Ventura: Record $705,000 median, up $55,000 in three months. That 8.5% gain topped 36 times since ’88.
San Bernardino: Record $436,500 median, up $34,000 in three months. That 8.4% gain topped 23 times since ’88.
Riverside: Record $489,750 median, up $33,000 in three months. That 7.2% gain topped 25 times since ’88.
How bubbly?
On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … FIVE BUBBLES!
Southern California housing wasn’t affordable when 2021 started.
And how many people got a 10% pay hike since January? So, affordability has further suffered in the year’s first quarter.
Don’t forget, the downpayment required also grew by 10%.
Plus, mortgage rates have crept up from January’s all-time lows, cutting a house hunter’s buying power by roughly 4%.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
