Home Prices in Southland Hit Record Highs

Home prices in Los Angeles and Orange counties posted double-digit percentage gains in September from a year earlier, once again setting record highs.

The gains, which were expected, came as the number of homes sold dropped by 5% in Los Angeles County and 6% in Orange County.

In recent months, the tight inventory of affordable homes has contributed to somewhat lower sales activity, skewing the market more toward pricier and new homes and, hence, somewhat inflating overall median prices.

The median price of houses and condominiums sold in Los Angeles County last month went up 10% to $206,000, according to a report released Monday by DataQuick Information Systems, a La Jolla research firm.

That amount surpassed the record of $205,000 in August, and analysts said home appreciation appears to be spread more widely throughout the county.

In Orange County, strong price gains in the resale market pushed up overall home prices by more than 13% last month. The median price, the point where half the houses sold for more and half for less, now stands at $277,000, the highest in the Southland.

It was the sixth time in nine months that Orange County set record highs in home prices.

Despite signs of a weakening national economy, John Karevoll, the DataQuick analyst who compiled Monday’s housing report, doesn’t see a softening in Southland housing prices. “There’s no sign of any slowdown,” he said.

In Los Angeles County, the number of sales fell to 9,415 in September from 9,953 a year earlier. In Orange County, sales dropped to 4,171 last month from 4,450.

Analysts attributed the declines in the number of homes sold in both counties to rising prices, fewer people who can afford typical homes and a shrinking base of homes on the market.

In addition, DataQuick noted that sales were affected by one less business day in September than a year ago.

Still, DataQuick said sales in Los Angeles County were among the strongest in a decade. But sales in Orange County declined from last year when the second strongest September was recorded since figures were first kept by DataQuick in 1988.

Prices are expected to continue rising briskly, while the number of homes on the market shrinks, said Leslie Appleton-Young, chief economist for the California Assn. of Realtors trade group.

Homes are selling quicker, changing hands in about 30 days compared to 40 days during the same period last year, she said. That indicates there is high demand for homes, she said.

Moreover, the number of homes on the market at the current selling pace would last for only 3.4 months, down from 3.7 months a year ago, pushing prices up. A 10- to 12-month supply would indicate a balanced market that keeps prices in check.

But confidence in the economy and the housing market could be swayed in coming months by rising oil prices, increased volatility in the stock market, and rising tension in the Middle East, Appleton-Young said. “Unless those risk factors become dominant, the market will still be very strong,” she said.