Southern California home prices hit a record in March, driven higher with the help of all-cash and wealthy buyers less sensitive to interest rates.
The average home price in the six-county region clocked in at $869,082 in March, up 2% from the prior month, according to data from Zillow.
Southland home values are 9% higher than a year earlier and 1% above the previous record reached in June 2022.
Prices climbed in all six counties, including Los Angeles, where the average home costs $885,363.
Economists and real estate agents say prices are rising despite sky-high interest rates because of an extreme shortage of listings.
When rates surged in 2022, home prices fell in response as buyers pulled away and inventory swelled. But prices started rising again last year as homeowners increasingly chose not to sell, unwilling to give up their rock-bottom mortgage rates on loans taken out before and during the pandemic.
Across the region, home prices have now set records in Orange, San Bernardino, San Diego and Ventura counties. In Los Angeles and Riverside counties, prices are less than 1% from their all-time highs.
Another factor driving prices higher is the region’s wealth gap. Though most Southern Californians can’t afford to buy a home, there are plenty of high-income earners who can.
Many longtime homeowners have also built up considerable equity and can sell and plunk down extra-large down payments that negate the effects of high interest rates. Others are getting help from parents or liquidating stock portfolios.
In all, 23% of L.A. County homes sold in February were bought with all cash, up from 16% in 2021, according to Redfin. National survey data from Zillow also show the percentage of people putting at least 20% down has risen as mortgage rates have climbed.
Prospective buyers have received a sliver of good news in recent months. Inventory remains extremely tight, but more homes are starting to trickle onto the market.
What happens next depends a lot on the direction of interest rates. Some economists say a surge in rates from here could send prices back down as housing becomes more unaffordable.
On the other hand, falling mortgage rates would immediately make housing more affordable, but it probably would attract more buyers to the market and could push up prices.
Orphe Divounguy, a senior economist with Zillow, said the way out of that conundrum is twofold: continued income growth and more housing construction.
Note to readers
Welcome to the Los Angeles Times’ newly launched Real Estate Tracker. This page will be updated every month with data on housing prices, mortgage rates and rental prices. Our reporters will explain what the new data mean for Los Angeles and surrounding areas and help you understand what you can expect to pay for an apartment or house.
For now, many economists expect home prices to rise in the near future, but less so than during the pandemic, because high interest rates will still prohibit how high most people can bid.
According to the latest forecast from the Mortgage Bankers Assn., rates should fall by the end of 2024, but the forecasted 6.1% is more than double what it was several years ago.
Explore home prices and rents for March
Use the tables below to search for home sale prices and apartment rental prices by city, neighborhood and county.
Rental prices in Southern California
In recent months, asking rents in many parts of Southern California have ticked down, providing at least some relief for those seeking apartments or rental homes.
Experts say the trend is driven by a rising number of vacancies in the region, which have forced some landlords to accept less in rent. Vacancies have risen because apartment supply is expanding and demand has fallen as consumers worry about the economy and inflation.
The large millennial generation is also increasingly aging into homeownership, as the smaller Generation Z enters the apartment market.
Prospective renters may not want to get too excited, however. Rent is still extremely high.
In March, the median rent for vacant units of all sizes across Los Angeles County was $2,066, down 2% from a year earlier but 8% more than in March 2020, according to data from Apartment List.
