Home Market Is Hotter Than Ever Despite Rates, Jumpy Stocks
Cayce and Collyn Justus thought their offer on a three-bedroom home in Van Nuys was a sure thing until they lost the house to a competitive bidder the same day. In the three months it recently took to find a nearly identical house on the same block, the price shot up $25,000, forcing the couple to stretch their budget.
“I got more and more uncomfortable as time passed,” Collyn Justus said. “My original price range was no longer valid, and I was worried that a sale just wouldn’t happen.”
As the spring home-buying season peaks this month, Realtors around the Southland report that despite interest rate fluctuations and a seesawing stock market, the real estate market is hotter than ever.
From Ventura to Riverside, buyers are paying top dollar for houses and condos. Figures supplied by Acxiom/Dataquick Information Systems Inc., a real estate research firm based in La Jolla, reflect record-high home prices in Los Angeles and Orange counties in March.
In Los Angeles County, the median price of all housing rose 6% to $192,000. Last month in Orange County, the median price of new and existing houses and condos surged 12% from the previous March to a record $226,000.
“We’re currently seeing a marketplace we haven’t seen for a long, long time,” said Carla McKendry, a broker associate at Re/Max Realty in Yorba Linda. “If properties are priced at anywhere near what they’re worth, they are going in a New York second.”
Real estate experts attribute the market’s robust health to continued consumer confidence in the strong economy, coupled with the lowest unemployment level in 27 years, according to the latest U.S. Labor Department figures. Buyers, apparently undaunted by a TK % rise in interest rates this year, are grabbing up properties that in many cases sell for more than the asking price.
Even after the April 14 stock market correction, Betty Graham, a Coldwell Banker manager in Beverly Hills, joined 60 other agents at a recent brokers’ open house for a Beverly Hills home listed at $2.5 million. By midafternoon, four offers were on the table. The home went to a buyer who offered 5% more than the asking price.
The picture isn’t entirely rosy, however. Agents representing high-end homes are reporting that some sellers, unsettled by recent stock market fluctuations and the threat of interest rate hikes, have taken their homes off the market. Experts say that these economic jitters could filter down into the broader market by summer, when sales traditionally slow and the Fed is expected to raise rates again.
“There are some indications that the purchase market will cool relative to last year,” said Nima Nattagh, director of research for First American Real Estate Solutions. “But last year was great in Southern California.”
A whopping 299,586 new and resale homes and condominiums sold in Southern California last year, the highest sales count since 315,721 were sold in 1989, according to Acxiom/Dataquick.
The average 30-year fixed-rate mortgage with no points in Southern California was about TK % last week, climbing to about TK %, according to TK.
Still, most Realtors don’t see interest rate hikes posing a significant problem.
“I don’t think many people will back out because of the fluctuating [interest] rates,” said Liz Niffousi, assistant manager of Prudential-Jon Aaroe & Associates Realtors in Studio City. “Our biggest problem is that we have so little inventory.”
Lack of inventory is the No. 1 complaint voiced by real estate agents and home buyers. Jeff Stoffel, a Century 21 Showcase agent in San Bernardino, said that he and other Realtors in the Inland Empire have resorted to knocking on strangers’ doors to see if they’re interested in selling their homes to eager buyers. He claims it’s working.
“We’re selling houses before they even hit the [multiple] listings,” Stoffel said. “Before I can get it in the computer, we’ve got offers. The buyers are calling all the time.”
Maureen McQuiston, a Beverly Hills Coldwell Banker agent, said that Westside buyers, who have had to cope with a severe shortage of available housing for a year, are encouraged by a slight increase in inventory, which she attributes to seasonal sales activity.
She added that homes priced at fair market value are still receiving multiple offers, pushing prices ever higher.
In Los Angeles County, the affordability index, which measures the percentage of households able to afford the median home price, fell 10% in February over the same period a year ago. San Diego County posted the greatest drop in affordability, about 28%, last February.
Agents in Ventura County have been faced with a similar affordability bind. Kay Wilson-Bolton, a Century 21 Buena Vista broker in Santa Paula, said that the buyer of a nine-acre Fillmore property paid about 20% more than the asking price in a recent bidding war.
“Even a couple with perfect credit and wonderful jobs are caught in a bind here,” Wilson-Bolton said. “They are really feeling the crunch.”
