First published in the Nov. 26 print issue of the South Pasadena Review.
Despite a recent market slowdown, South Pasadena’s home values continue to increase rapidly, nearing an estimated $1.5 million for single-family units.
The midmarket South Pasadena home value — including single-family houses, condos and co-ops — was roughly $1.25 million in October 2020, according to the Zillow Home Value Index. In October 2021, that figure was about $1.46 million, reflecting a one-year increase of 17%. October’s number also reflects a jump of nearly 43% from 2016, when the typical home value was an estimated $1.02 million.
Zillow’s index is a seasonally adjusted estimate of home values in the midmarket — 35th to 65th percentile — range.
While the housing market has been on the rise for the past several years, values have increased rapidly this year. In Los Angeles County, Zillow data shows, home values increased by about 0.6% from October 2018 to October 2019. The one-year increase grew to 8.8% between October 2019 and October 2020, and 16.8% between October 2020 and October 2021.
Housing market experts have attributed the increasing prevalence of $1 million homes across Southern California to rising incomes, low mortgage rates and a pandemic-induced flood of demand from well-off residents tired of renting, according to the Los Angeles Times.
South Pasadena, like many of its neighboring cities, has largely followed the county’s trend. Between October 2018 and October 2019, values increased by just 1% in South Pasadena, and they increased by 6% between the same months in 2019 and 2020.
Compared to the nearby cities of San Marino, La Cañada Flintridge, Burbank, Glendale and Pasadena, South Pasadena’s midmarket homes tend to fall somewhere in the middle of the range, according to Zillow data. Pasadena’s homes were typically the least expensive at an estimated $1.08 million in October, while San Marino’s were by far the most pricey at roughly $2.52 million.
However, the surge in home values is showing signs of slowing as the market approaches the winter months, according to the California Association of Realtors. The organization also reported that the share of California houses sold above asking price in September fell to its lowest percentage — 60.2% — since February. Prior to September 2020, less than half of sales were above asking price.
“Slower sales activity suggests that the market is returning to its typical seasonal pattern and further market normalization can be expected in the upcoming months,” CAR Vice President and chief economist Jordan Levine said in a news release. “While the market is showing signs of cooling off in recent months, 2021 continues to outpace last year’s sale level so far and is expected to post a gain at year-end.”
Heightened home values, while good news for owners, has prevented some would-be buyers from entering the market. In the third quarter of 2021, according to CAR, an estimated 24% of households could purchase a median-priced, existing single-family home in California, down from 28% in the third quarter of 2020 and 56% in the third quarter of 2012.