Southern California house prices continued rising in January as buyers high on low mortgage rates continue to bid up the cost of homebuying, especially in the Inland Empire, according to CoreLogic’s latest Home Price Index, released Tuesday, March 2.
Price gains in Riverside, San Bernardino and Orange counties rose to their highest levels in nearly seven years. Los Angeles County’s price appreciation in January was the largest in three years.
Inland Empire house prices jumped 12.4% in the 12 months ending in January, the biggest year-over-year price gain since June 2014, according to the CoreLogic HPI.
The Inland Empire has seen a surge in demand for all housing, for sale and rental, as employees now working from home seek more space and lower prices, pushing prices to all-time highs for the first time since the pre-recession housing boom of the mid-2000’s.
But price gains have been steady in coastal areas as well.
Orange County’s house values increased 7.3% as of January, the biggest appreciation rate since May 2014.
In L.A. County, house values rose 8.1%, the biggest gain since March 2018.
Like the S&P Case-Shiller index, CoreLogic’s HPI is based on comparisons between each home’s previous and latest selling prices. The index uses sales comparisons for existing single-family homes only.
Economists have given several reasons for why the housing market has boomed even as the coronavirus pandemic hamstrung the overall economy.
Chief among them have been record-low mortgage rates, with the 30-year fixed-rate mortgage averaging at less than 3% for the past 11 months.
Experts also note that the pandemic impacted renters more than the homebuying slice of the workforce, which more often is able to continue working from home during lockdowns.
Demographics also play a role, with many millennials reaching an age when adults typically start having families and buying homes.
Nationally, home price growth experienced its first double-digit appreciation rate since November 2013. U.S. house prices were up 10% in January.
“First-time buyers (are) driving high demand, (and) entry-level homes remain in short supply,” CoreLogic Chief Economist Frank Nothaft said in a statement.
Homes selling 25% below the local median home price had an annual appreciation rate of 14%, wiping out most of the benefits of record-low mortgage rates, he said.
“When interest rates rise,” said Nothaft, “the affordability squeeze for first-time buyers will become even more of a challenge.”
