The already dizzying Los Angeles housing market is poised to reach new heights, as the latest data from Zillow suggest that the median home listed in the city will soon cost more than $1 million.
As of June 30, the figure was $975,333, more than a 30% increase from five years prior. Statewide, six other cities were even more expensive and had already crossed the million-dollar mark: San Jose, Santa Maria, Santa Cruz, Salinas and San Francisco.
In Santa Cruz and San Diego — the major markets with the largest increases — median listing prices were up more than 40% over the last five years. Inflation over the same period was 21%, according to the U.S. Bureau of Labor Statistics.
“Even if it is an arbitrary number, it’s an astounding one,” Michael Lens, a professor of urban planning and public policy at UCLA, said of the million-dollar median.
“A signature way that generations have built wealth in this country is through the housing market,” he said, and the figure “puts in pretty sharp focus the barriers to entry in that housing market in building wealth and having a predictable and stable home over your head.”
The rising prices are not just a headache for those seeking to buy a home, either. “Rents and home prices are typically going to move in the same direction,” said Lens, noting that such prices are driven by same issues of “scarcity and high demand.”
“If it’s that lucrative to sell a home, you’re going to be less likely to rent out that home,” he said, “or you’re going to command a very high rent because your other opportunity is to sell something for a million dollars.”
For home buyers and renters alike, Lens said, the solution is the same: more housing.
Although government programs exist to assist first-time home buyers, those programs are “not gonna help a nurse buy a million-dollar home,” he said.
In California, Zillow’s Home Value Index for June 2023 was $743,361, the second highest of any state. That was almost five times the estimated value of the median home in West Virginia, which had the lowest figure in the nation at $155,773.
The index “reflects the typical value for homes in the 35th to 65th percentile” in a given region, and is connected to but distinct from the actual price at which homes are listed.
By another measure — the median home listing price — California homes have increased by 36.3% to $777,000 in June, according to the Federal Reserve Bank of St. Louis. That up from $570,000 in June 2018.
The top 10 major metropolitan areas in America for median listing price in June were all in California, according to a Times analysis.
Only Hawaii, with a median home value of $837,324, had a figure higher than California’s.
Several Southern California cities are close behind L.A. and will likely soon see their median list prices top $1 million as well.
San Diego, Oxnard and San Luis Obispo are also over $900,000 and have each seen more than 30% growth in median home list price in the past five years.
Lens pinpointed several steps the state is taking to increase the housing stock, but said that it won’t be enough.
His proposed solutions included “getting rid of single-family zoning and upzoning those neighborhoods,” removing “onerous parking requirements” and scrapping rules on minimum setbacks and floor to area ratio.
Altogether, the state should fix “a lot of boring zoning things that together make the cost of building more housing more expensive or put blanket bans on certain housing types,” Lens said.
“We are not on a fast track to building the kind of housing necessary.”