March Median Home Price Up 12% in O.C., Ties Record
Surging Southern California home prices last month matched a record in Orange County and set one in Los Angeles County, surprising analysts who expected the softening economy to slow down rising housing costs.
The median price for an Orange County home rose 12.3% from March last year to $292,000, the same cost recorded in December, according to a report released Tuesday by DataQuick Information Systems Inc., a La Jolla research firm.
The increase marked the 14th consecutive month that the median price, the point at which half the homes sell for more and half for less, rose by double-digit percentages.
In Los Angeles County, the price hit an all-time high of $218,000, a 13.5% hike over the previous March and the largest year-to-year monthly increase since 1989. The spike also is only the second time in nearly four years that the Los Angeles figure rose faster than Orange County’s.
“We don’t see much of a downturn, which is what people are looking for, and I don’t see a price decrease in the cards,” said John Karevoll, a DataQuick analyst who compiled the report. “What we see is a continuation of the trends that were in place three and six months ago.”
But even as the market heads solidly into the prime selling season, real estate agents see a few signs of consumer wariness. Buyers are questioning whether the time is right, for instance, and more deals are being canceled, they said.
DataQuick reported that the number of homes sold dropped from a particularly strong March last year, partly because of fewer homes on the market. Sales fell 10% in Los Angeles County and 9% in Orange County. Karevoll attributed a third of the decline to one less weekday last month in which to record closings.
“What I’m seeing right now in Southern California is a bit of a plateau,” said Leslie Appleton-Young, chief economist for the California Assn. of Realtors. “It’s a time of uncertainty, but it’s still a relatively healthy market.”
By the end of summer, the softening economy should lead to fewer new jobs in Southern California, which would weaken demand for housing, said Esmael Adibi, a Chapman University economist and research director. He predicts that home prices will rise about 8% in both counties, compared to about 13% last year.
While the market is less frenzied than a year ago, the trend over the first three months shows strong price gains--10% in Los Angeles, 12% in Orange County--over last year’s first quarter. Sales, though, tailed off 4.4% in Los Angeles and 9.2% in Orange County.
The National Assn. of Realtors predicted earlier this month that all major housing indicators would rise, leading to a 4% gain in prices and the second best year on record for home sales. The real estate market would be boosted by low unemployment and low mortgage rates, said David Lereah, chief economist for the Washington trade group.
But buyers have grown more cautious as they see the stock market struggle and the number of layoffs increase. And a slower sales pace makes it harder for a buyer to sell a home and move up to a bigger one.
“A number of sales agents are getting more . . . buyers asking, ‘Is it a good time to buy?,’ ” said John Burns, an analyst at the Meyers Group, an Irvine consulting firm. “A year ago, they were asking, ‘What time do I have to be here to get the lot I want?’ ”
In Orange County, for instance, the number of buyers placing deposits on new homes during the first three months of the year rose 10% over last year’s first quarter, but those who canceled their orders jumped 70%, according to the Meyers Group.
In one project, a group of consumers remained on a waiting list for more than five months to purchase $400,000 houses in south Orange County, Burns said. When their turn finally came last month to make a down payment, none stepped forward to buy. Still, with scant housing construction in the county, new customers snapped up the homes within days.
Homes in Orange County also are staying on the market a little longer. At the March sales pace, it took 2.8 months to sell a home, up from 2.2 months a year earlier. The time, though, is far below the industry standard of nine months, according to the state Realtors group. A similar figure for Los Angeles was unavailable.
Once the homes are sold, though, sellers typically are getting large returns. A quarterly survey of Realtors shows the median amount for seller’s equity rose to a record $100,000, allowing people to move up into more expensive housing.
Buyers of high-end homes, a bellwether for the overall real estate market, are showing less enthusiasm for million-dollar homes as they make offers below full price and take longer to make up their minds about buying, Appleton-Young said.
In Huntington Beach, three homes priced at more than $3 million each are in escrow, said Chuck Grant, who manages a First Team Real Estate brokerage in Huntington Beach. Clients think about holding back from making a purchase until they see the thin inventory of luxury homes, he said, and then buy before prices go higher.
Some lenders also have reported brisk business. At Washington Mutual Bank, the state’s largest home lender, the dollar volume of mortgages has risen 10% during the first three months of the year compared to a year ago, said Greg Sayegh, a senior vice president. In the spring and summer, “we think the volume will continue to grow,” Sayegh said.
Lower mortgage rates have helped reduce monthly payments in March. With a 10% down payment and a 30-year fixed mortgage at 6.58%, a consumer’s monthly payment for a median-priced home in Los Angeles would $1,250, or $2 lower than a year ago. In Orange County, the typical monthly payment would be $1,675, or $21 less compared to a year ago.
The DataQuick report covers home sales that closed in March, reflecting agreements between home sellers and buyers over the previous 30 to 60 days. A similar report is expected to be released later this week for Ventura, Riverside and San Bernardino counties.
