San Diego-based DataQuick said Wednesday that California's median home prices surged to the highest level in nearly five years. The research firm said the median price paid for a home in California was $324,000 - the highest since June 2008. (Photo: A home for sale in Central Los Angeles.)
Southern California homes sold at a robust pace for the month of April, at the highest level in seven years, according to San Diego-based research firm DataQuick. The increase was due to fewer homes for sale.
There were 21,415 homes and condos sold in Southern California last month, up 9.5 percent from a year ago, DataQuick said. The pace was the highest for the month of April in seven years. The median price was $357,000 in April, up 23 percent from a year ago, the research firm said.
Why are home prices rising?
Ritter-Martinez said there are fewer foreclosures and distressed properties, which means less rock-bottom prices for homes. Demand for homes is outpacing the supply. Many buyers were reluctant to buy a home during the recession. As unemployment decreases, people are now feeling more ready to purchase a home, but there are fewer homes for sale.
There is only a 2.8 month supply of homes for sale in Southern California, said Sara Sutachan, manager of broker and real estate finance outreach for the California Association of Realtors. That is way below the normal supply of six to seven months, she said.
"We are well below that and have been well below that for quite some time," Sutachan said.
But if home prices are increasing, why aren’t more people selling their homes?
Some homebuyers still owe more money on their homes than what the property is worth, said Andrew LePage, an analyst with DataQuick.
LePage said some home owners may also be waiting for home prices to rise even more before selling their properties.
Who are buying these homes?
Absentee buyers: The majority of this group are made up of investors who buy the homes and then rent out the properties, DataQuick said. This group represents about one-third of homebuyers and many pay in cash.
First-time homebuyers: This group of buyers should expect to encounter challenges in purchasing their first home. They compete with absentee buyers and may need to place a larger down payment or pay in cash in order to secure the home.
Existing homeowners: People who are ready to move to a different home or area.
What are the average home prices in Southern California?
Los Angeles $395,000, up 27 percent
Orange $535,000, up 17 percent
Riverside $248,000, up 24 percent
San Bernardino $195,000, up 25 percent
San Diego $400,000, up 21 percent
Ventura $420,000, up 17 percent