SoCal Residents Worry About Possible Housing Bubble As Prices Climb, Inventory Drops
MANHATTAN BEACH (CBSLA.com) — According to real-estate website Trulia’s first-quarter “Bubble Watch,” the top two overvalued housing markets in the country are Orange and L.A. counties.
Climbing prices, combined with low inventory, is causing worry for some would-be home buyers, concerned about the possibility of another bubble.
Danielle and Robert Merrill told CBS2’s Serene Branson they have put in offers on 10 homes in the past five months, from Mar Vista to Santa Monica, but lost out on them all.
“It feels like it’s climbing at an unbelievable rate and it seems that prices have really jumped way up,” Danielle said. “It’s emotional. Every time a property comes on, and with this market you jump on the day it comes on the market.”
“It’s been a difficult process because the inventory is so low prices are just going up and up and up,” Robert said.
According to the California Association of Realtors, the median home price in L.A. County was $390,000 for February 2014 – up 15.2 percent from the same period last year.
In Orange County, the median home price last month was $677,000, up 11.6 percent.
The numbers show affordability has also dropped.
Only 30 percent of L.A. County residents can afford a median price home, down from 44 percent last year. In Orange County, it’s down to 20 percent from 34.
Real-estate agent Jeremy Shelton, of Shorewood Realtors, pointed to a three-bedroom Manhattan Beach home that sold over the asking price.
“Inventory is tragically low,” he said. “This came on a week-and-a-half ago. We had three offers right off the bat.”
Shelton said it’s a seller’s market, and he predicts modest increases before prices level off.
“Much like 2006, 2007, we have limited inventory. Prices are therefore going higher. There are a lot of qualified buyers, which is the key in the market now – unlike we had in 2007. So yeah, we are seeing a frenzy,” he said.
It’s a tough reality for buyers like the Merrills, who have been beat by so many all-cash, no contingency offers they’re taking a break before jumping back in.
“We’ve been through such an emotional ride with the market not knowing where it’s going to go from here,” Danielle said.