After over five years of steadily rising home prices, Southern California’s housing market is “overvalued,” real estate data firm CoreLogic reported Tuesday.
As of October, the Los Angeles County, Orange County and Inland Empire housing markets were among 37 top 100 U.S. metro areas where home prices were 10% or more above the long-term, sustainable level, according to the data firm’s latest Market Indicators Report.
Twenty-six of those top 100 markets were undervalued, and 37 were “at value,” the report said.
Price gains in October, well above the previous year’s averages, helped push market indicators over long-term trends.
Price gains reported Tuesday in CoreLogic’s latest Home Price Index were sharpest in the Inland Empire, the region’s most affordable market, rising 8.1%. That’s the Riverside-San Bernardino county area’s biggest year-over-year house-price gain in two years. Inland Empire price gains averaged 6.4% during the preceding year.
Los Angeles County house prices increased 7% in the year ending in October, with gains of 5.7 percent in Orange County, the region’s priciest housing market, CoreLogic figures show. Both were also above average gains for the previous 12 months.
A lack of supply of homes for sale accounted in large part for fall-time price gains. Southern California home listings have been at five-year lows since late August, a separate report by ReportsOnHousing.com shows. Tight supplies also have been reported both across the state and nationally.
Nationwide, the index value for U.S. homes increased 7% in the year ending in October, while California’s house price was up 7.6% year over year.
“This escalation in home prices reflects both the acute lack of supply and the strengthening economy,” said Frank Nothaft, CoreLogic chief economist.
CoreLogic’s “repeat-sale” price index determines value changes by comparing sale prices for attached and detached single-family homes with their previous sale prices. That different methodology accounted for one discrepancy between Tuesday’s report and a separate CoreLogic report issued last week. The Home Price Index showed Orange County’s house price increased 0.6% from September to October, while a separate CoreLogic based on median prices of all homes (not just houses) showed a month-to-month price drop.
Upon further inspection, numbers show last week’s month-to-month price drop was caused in part by a decrease in sales of luxury homes in October. Repeat-sale comparisons tend to control for shifts in the mix of homes sold.
Tribune Content Agency