Southern California home prices posted a sizable pop in December, bucking a months-long cooling trend.
The median sales price across the six-county region reached $395,000 last month, a 2.6% gain from November and 22.3% over the year, DataQuick said Tuesday. It was the first significant month-over-month increase since June, a rise the research firm attributed to fewer distressed sales and demand that has outstripped supply.
Sales tumbled 9.2% over the year and rose less than normal from November, evidence of the constrained inventory available for home seekers. Buyers scooped up 18,415 new and resale houses and condos last month, the lowest level in six years.
"Sales have fallen short of the same period a year earlier for three consecutive months now, and the pitifully low inventory is the main culprit," DataQuick President John Walsh said in a statement. "The jump in home values over the last year suggests we'll eventually see a lot more people interested in selling their homes, which would help ease the inventory crunch."
The December data cap a whirlwind year for Southern California real estate. Home prices rose swiftly though the first half of the year, as investors and families battled over a meager supply of homes for sale. Bidding wars proliferated amid record-low mortgage rates and some experts raised concerns a bubble could form.
The market cooled through the summer and beyond, a slowdown caused by waning demand amid affordability constraints and a typical seasonal pullback, experts said. Home listings also expanded in the summer in many markets, although inventory remained tight.
It's unclear if December's strong price gains foreshadow a renewed price surge and the spring home buying season will provide a better look into the market's health. Most experts predict tamer price appreciation this year than last, in part because of higher mortgages rates.
Investor activity continued to fall in December, although it remains elevated. Absentee buyers, mostly investors, purchased 26.2% of all homes sold last month — the lowest level since November 2011.
More homes also sold in mid-to-high cost neighborhoods, driving the median price up, DataQuick said. The median is influenced not only by a rise in values but also a change in the mix of homes selling at any moment; it is the point at which half the homes sold for more and half for less.
Last month, the number of homes that sold for $500,000 or more rose 11.9% from a year earlier. Sales of lower cost homes went the other direction, plunging as inventory in those neighborhoods remains tight.
Many homeowners there owe more on their mortgage than their house is worth, limiting their ability to sell. Furthermore, investors have scooped up many homes in relatively affordable communities to flip or rent out.