California home prices rise in December
California home prices ticked up 1.1% in December from the previous month, continuing a slow but steady improvement for the state’s housing market, according to data released Thursday.
Home sales have been driven by low interest rates and a tax break scheduled to expire April 30 for first-time buyers and certain current homeowners. In Southern California and the San Francisco Bay Area, steeply discounted foreclosure properties remain a big part of the market, though those homes as a percentage of the total have been decreasing in recent months.
The statewide median price paid for a home in December was $264,000, up from $261,000 in November. That was a 6% increase from $249,000 in December 2008, according to MDA DataQuick of San Diego, a firm that closely tracks the California real estate market.
The year-over-year increase was the second in a row after 27 months of decline.
Some experts worry that once federal policies supporting the market wind down, the California housing market could again falter.
“That is the key,” said Daniel Penrod, senior industry analyst at the California Credit Union League. “When they end, is the industry healthy enough to maintain its momentum, or are we going to see a little more of a retreat?”
California’s high jobless rate and budget woes remain a concern. The state’s unemployment rate was 12.3% in November. December figures are expected to be released by the government today.
Richard Green, director of the USC Lusk Center for Real Estate, was optimistic about the state’s housing recovery, particularly in coastal areas.
“We really are different from Florida and Arizona. We probably built houses in the wrong place, we probably built houses that were too expensive, but we did not build too many houses the way that other places did,” Green said. “So that puts us in a fundamentally better position.”
An estimated 41,837 homes were sold statewide last month, a 16.7% increase from November and a 10.6% increase from December 2008. Forty-one percent of all December resale homes were properties that had been foreclosed on during the last year. That was an increase from a revised 40.1% in November, down from 55.2% in December a year earlier and from a peak of 58.8% in February, DataQuick said.
The median price paid for all Southern California homes was $289,000 in December, up 1.4% from November and 4% higher than in December 2008. In the San Francisco Bay Area, home prices declined 1.8% in December from November, to $380,000, but rose 15.2% from December 2008, the third consecutive year-over-year gain, after 22 months of decline.
The Southland and the San Francisco Bay Area hit their best sales numbers for a December since 2006. MDA DataQuick President John Walsh cautioned that despite rising home prices and steady sales, the road ahead could be rocky.
“There’s a good chance we’ll refer to the beginning of 2009 as the bottom of the market. But that doesn’t mean we’re anywhere near normal yet,” he said. “Sales distribution is still lopsided toward lower-cost homes, driven by tax incentives and distress activity. Whole mortgage categories don’t exist for buyers.
“Putting a deal together is excruciating,” he said, “like swimming in molasses.”
