L.A. Median Cost Hits $220,253 : Prices, Interest Rates Slow June Home Sales
Sales of single-family houses fell 8.2% in the Los Angeles area during June, reinforcing the belief that soaring prices and rising interest rates earlier this year have stalled the frenzied market of 1988, the California Assn. of Realtors reported Monday.
“It’s definitely an indication of a softening of demand,” said Chris Taylor, the group’s senior research economist. “Buyers are being more cautious and taking their time. They are holding back to see what is happening with interest rates and home prices.”
The median price of a house in California fell during June for the first time since December, dropping 0.7% from $201,930 in May to $200,445. However, last month’s median price was 17.8% higher than in June, 1988.
And in the group’s Los Angeles region, the median price rose 1.2% to $220,253 in June from $217,708 in May.
Statewide, June’s 487,000 home sales represented a 9.2% decline from May and a 13.9% drop from June, 1988.
Real estate experts attributed at least part of the decline to the absence from the market of first-time home buyers.
“There are more homes available, but the prices are not in the affordable range,” said Temmy Walker, president of James R. Gary & Co. East in Studio City. “The affordable-priced house has disappeared like the dinosaur.”
The estimate by the realtors’ group of the time it would take to sell the houses listed for sale statewide--based on the current pace of sales--rose from 5.6 months in May to 5.8 months in June.
The San Fernando Valley area is typical of the California market--in June, 1988, 1,918 houses were sold while 2,746 were for sale. Just last month, the Valley had 3,750 houses for sale, but only 1,578 sold.
In Orange County, sales of single-family houses rose 6.9% in June but were down 29.1% from a year ago. The median price was up 1.7% to $251,674 from $247,397 in May.
Such prices are out of reach of many first-time buyers. “Affordable is $200,000?,” Walker asked. “C’mon. How many people can afford $200,000?”
The realtors’ association said it expects sales to be slower again this month.
“It’s likely because what is happening is that the increase in interest rates in March and April are just now reflecting in closed escrow sales,” Taylor said.
The condominium market also took some hits during June.
Sales were down 0.9% from May but were up 11.9% from the same period a year ago. The median price of $138,174 was a 0.7% decline from May’s median of $139,117 but was 12.4% higher than the $122,903 of June, 1988.
The estimated time it would take to sell available condominiums grew from 4.6 months in May to 4.8 months in June.
“What used to be a sellers’ market last year is now more of a balanced market,” Taylor concluded. “We actually think the housing market will continue to be at a much slower pace than it was last year.”
MEDIAN HOME PRICES IN AREAS OF STATE
% Change % from Region June, 1989 June, 1988 Increase May, 1989 Los Angeles $220,253 $180,223 +22.2 +1.2 Orange County $251,674 $208,094 +20.9 +1.7 Riverside/San Bernardino $123,643 $108,567 +13.9 +0.5 San Diego $177,736 $147,605 +20.4 +1.2 Ventura $248,728 $195,209 +27.4 +2.2 Sacramento $107,895 $92,708 +16.4 +3.6 San Francisco $268,903 $215,434 +24.8 +0.5 California $200,445 $170,185 +17.8 -0.7
Source: California Assn. of Realtors
