Home prices in Los Angeles fell 7% in the fourth quarter of last year—but don't expect median home prices to start to fall this year. Research from HSH.com shows that the median home price in Los Angeles fell 7.02% quarter-over-quarter, but Keith Gumbinger, VP at HSH.com, says that it is normal to see quarterly pricing fluctuations. This year, however, he expects home prices to continue to rise is Los Angeles. Today, the median national home price is $553,300 in Los Angeles, while the national median-priced home is priced at $247,800. To purchase a home in Los Angeles, you need an income of $92,400 if you are putting 20% down. If you put 10% down, the required income shoots up to $127,869. We sat down with Gumbinger to talk about these stats and how they are impacting the market.

GlobeSt.com: Home prices fell in the fourth quarter. What drive Los Angeles home prices down in the fourth quarter 2017?
Keith Gumbinger: Quarter-to-quarter variances in prices aren't uncommon, and likely reflect the mix of homes sold during the period more so than anything else. For example, the so-called “spring” home buying season is likely to include more single-family detached homes as families look to get settled before the next school year; these homes are probably more expensive overall than would be townhomes or condos. To the extent that this seasonality exists, it can be better to consider year-over-year changes, and in this way, prices from a comparable period a year ago are up sharply.

GlobeSt.com: Do you expect home prices to continue to trend downward this year? Why or why not?
Gumbinger: There's no reason to expect lower home prices anytime soon. That said, there may be some tempering in the rate of increase, as tax law changes now limit the mortgage interest deduction for amounts about $750,000; at the same time, higher mortgage rates will continue to crimp affordability, and this could trim demand at the margins, likely helping price increase to slow compared to recent years.

GlobeSt.com: With the salary required to buy a home at $92,400, how many L.A. residents are in a position to purchase a home?
Gumbinger: It's important to remember that the data we work from is reflective of the median price of a home sold during the period; this means half of the homes sold were below this price (and salary point) and half above. That said, the estimated median family income (Census 2015 5-year estimate) in the L.A. Metro area is $67,898—only about 73% of the amount needed to buy that median priced home— so there is little doubt that buying any home in the market will be a challenge for residents with typical median incomes.

GlobeSt.com: Have the home prices in Los Angeles impacted the rental market?
Gumbinger: In recent years, tight supplies of homes to buy have seen more folks turning to rentals, and as with home prices, rents are also on the rise. Overall, costs of shelter have risen appreciably in recent years and continue to rise.

GlobeSt.com: What are the economic impacts of high home prices?
Gumbinger: Not clear how much space you can or want to devote to this, as the answer ranges across a wide spectrum of items; everything from high costs of rental housing, to increased property tax payments to cities and towns, the so-called “wealth effect” of rising home values on consumer spending and savings habits, gentrification/rehabilitation of urban/older housing stock, and probably a half-dozen other items.