Appraisers don’t see drops in SoCal home values – yet – Daily News

on Jul5
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“Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.

Buzz: The coronavirus has yet to hurt Southern California home values, according to a study done by a group of local appraisers.

Source: One of our most curious housing yardsticks is crafted by the Real Estate Research Council of Southern California. Since 1943, the group based at Cal Poly Pomona has tracked local home-value movements twice a year with volunteer appraisers constantly re-evaluating the same set of 308 single-family homes across seven Southern California counties.

The Trend

Their latest study done in April shows local home appreciation at a 3.8% annual rate, faster than 2.8% gains found in October. But price increases are still below the 5.3% seen in April 2019, and they’re less than the average annualized gain over five years of 5.6%.

The Dissection

The pandemic throttled the economy beginning in late winter, which also put the brakes on home sales. Massive job losses due to stay-at-home orders pushed some folks away from homebuying while some owners opted to skip making house payments. But historically low mortgage rates lured others and helped prop up the local market.

So a quick bout of discounting due to the turmoil — or hopes of cheaper prices, if you were house hunting — did not materialize.

The council’s study showed firm pricing across the region, with appreciation up from the fall but below long-term trends …

Los Angeles County: Up at a 3.5% annual rate in April, No. 5 largest among seven SoCal counties. Six months ago? 2.8%. Year ago? 6%. Five-year average? 6.02%.

Orange County: Up 3.3% in April, No. 6. Six months ago? 1.5%. Year ago? 4.1%. Five-year average? 4.65%.

Riverside County: Up 4.7% in April, No. 2. Six months ago? 3.7%. Year ago? 5.9%. Five-year average? 6.33%.

San Bernardino County: Up 5.7% in April, No. 1. Six months ago? 3.5%. Year ago? 5.7%. Five-year average? 5.61%.

Ventura County: Up 3.6% in April, No. 4. Six months ago? 2.9%. Year ago? 3.7%. Five-year average? 4.55%.

San Diego County: Up 3.9% in April, No. 3. Six months ago? 3.1%. Year ago? 5.1%. Five-year average? 5.71%.

Santa Barbara County: Up 1.6% in April, No. 7. Six months ago? 0.7%. Year ago? 3.1%. Five-year average? 3.56%.

Another view

Look at the year-over-year change in the six-county median selling price from DQ News. As of May, up 2.7% vs. 7.2% six months earlier and 1.9% in May 2019. Five-year average? 4.7%.

How bubbly?

On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … ONE BUBBLE!

While the council uses a small sample, the consistency of the targeted homes eliminates one flaw in other transaction-based valuation benchmarks — the changing mix of homes selling.

And don’t forget that what appraisers are thinking can swing a market. Their valuations are a key part of the mortgage-making process.

Yes, housing prices survived their first pandemic test. But without a quick return to a fully function economy, can appreciation last?



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