A tale of two California housing markets

by MPA24 Nov 2014
The Southern California housing market is moving at two different paces: fast for the wealthy and slow for everyone else. In fact, California holds nine spots in a list by CNBC of the 10 most expensive markets in the country.

The most expensive place to live in the country is Los Altos, California, according to the CNBC report. The average four-bedroom, two-bath house costs $1,963,100 there. That’s about 30 times the average cost of a similar home in Cleveland, the most affordable market in the country.

According to Interest.com's 2014 Housing Affordability Study, Sacramento experienced the biggest drop in home affordability during the last 12 months, sinking from 12th to 18th in the ranking. But it's still more affordable than the other three California metro areas on the list. Los Angeles (22nd), San Diego (24th) and San Francisco (25th) join New York City among the four least affordable markets.

Luxury home sales in Southern California are reaching levels not seen in years. The level of homes purchased for $2 million or more in recent months is the highest on record, according to the Los Angeles Times. Sales of homes priced $10 million or more are on pace to double their numbers from the height of the housing bubble by the end of the year.

Meanwhile, overall home sales in California are still below their pre-recession levels and remain relatively flat, according to the California Association of Realtors (CAR). Existing home sales in October were unchanged from a revised 396,400 in September, but were down 1.9% from a revised 404,000 in October 2013.

Selma Hepp, senior economist for CAR, told the Los Angeles Times that the juxtaposition reflects a housing market that is now moving at two speeds. Fast for the high end, sluggish for the rest. "It's just a completely different story between the two segments of the market," she said. "Those who are doing well are doing really well."