The Breakdown

Explaining Southern California's economy

California home prices up 30 percent over 2012, fastest pace in the nation

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The median price of a home in California was $345,000 last month, 30 percent higher than in September 2012, according to a report released Thursday by RealtyTrac. The Irvine-based housing data firm says home prices are rising faster in California than anywhere else in the nation. 

RealtyTrac Vice President Daren Blomquist says the boost in home prices stems from the fall in the number of foreclosed homes being sold.

"When you look at sales of bank-owned properties, they are about flat from last year, but they still represent 13 percent of all sales," Blomquist told KPCC. "But if we go back to the height of the housing crisis, back in 2009-2010,  close to 50 percent of all sales were these bank-owned homes."

The rising home prices also indicate that institutional investors  — individuals or firms that buy up large numbers of homes in order to rent them out — are retreating from the California market, the report says.  

RealtyTrac began tracking the percentage of home sales to institutional investors in January 2011. In September, they represented 14 percent of all home sales nationwide, a jump from 9 percent a year earlier.  But in California, the percentage fell, from 9 percent to 7 percent

"The fact that home prices are still accelerating at such a rapid rate is a sign that, at least in California, the market is not just being propped up by these institutional investors who are coming in and buying large chunks of property," Blomquist said. 

Institutional investors are looking for deals, said Blomquist, and there are fewer and fewer in California. In the Los Angeles and Orange County market, institutional investors only represented 6 percent of all sales in September. The number was higher in the Inland Empire, where there were more foreclosures and cheaper homes: 11 percent of September sales in the Riverside-San Bernardino market.

California was one of the states hardest hit by the foreclosure crisis. Blomquist added there might be one last burst of foreclosures in the next six to 12 months, as lenders adjust to the Homeowners Bill of Rights, but the burst won't be substantial enough to cause home values to drop.

September 2013 U.S. Residential & Foreclosure Sales Report

 

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