How current Southern California home prices compare to past decades.
Does it still make sense to buy a home in this market? I know a lot of people are concerned about higher interest rates and home prices, and I understand where they’re coming from. It’s definitely more difficult to purchase a home than it was during the peak of the pandemic market. That being said, is our current market really that bad? To answer this question, I want to take a look back at the recent history of home prices in the U.S. and California and give some context for our current housing market.
1. Home prices “adjusted for inflation”. Using this inflation calculator and median home prices data, we can see that the median home in the U.S. in 1971 adjusted for inflation was $216,571.92. That’s incredibly cheap considering what homes are going for in Southern California right now! When we look at where prices were in 1993, the story is pretty similar – the median home prices was $318,797.51 after adjusting for inflation. That’s definitely an increase from 1971, but it isn’t the crazy jump you might have expected. Similarly, the median home price in 2023 was $412,000, which is similar to the jump we saw from 1971 to 1993.
2. A history of Southern California home prices. If you check out this website, you can see the median home price in Southern California counties all the way back to 1990. Since we already used 1993 as an example, we can see that the average sales price in LA County was $201,134, which comes out to $434,792.46 after adjusting for inflation. That’s higher than the national average, but not by much. As you can see from the website, Southern California in general was more expensive than the rest of the country back in 1993, but the gap was not very large – some counties were actually even cheaper than the national average!
3. What happened? Once again, if you check out the chart on the previously mentioned website, you can see that Southern California prices stay slightly ahead of the national average and grow at a steady pace, with two major exceptions. First, prices dramatically decreased after the 2008 recession, but they bounced soon after. Second, prices increased at an unprecedented rate during the COVID-19 pandemic and the following years. Due to low interest rates, high demand, and very limited supply, prices increased rapidly; in fact, they’re still increasing, just at a more normal rate.
So what does this all mean for you? I don’t think Southern California prices are coming down anytime soon, but I also don’t think they’ll increase as fast as they did during the peak of the pandemic market. If you’re looking to buy in our area, it’s still a good investment in the long run.
Call or email me with any questions about this topic. I look forward to hearing from you!
