Area’s Home Sales, Prices Keep Rising
The housing market across much of Southern California grew at a blistering pace last month, achieving the strongest sales and price gains in any March in 13 years.
Los Angeles County’s median home price jumped 15% from a year ago to a record $251,000, according to a report released Tuesday by DataQuick Information Systems Inc. Sales of new and existing homes rose 17% to 10,651, the highest level in March since 1989.
Sales and prices also grew robustly in Orange County and other markets as buyers across much of the region searched anxiously for the right house. Brokers said multiple offers grew more common in March, pushing up the cost of homes and leaving first-time buyers, in particular, frustrated at their lack of options.
“My agents have lots of buyers, but there are not enough houses,” said Marty Rodriguez, who owns a Century 21 office in Glendora. “They’re selling almost as fast as they come up.”
Buyers are pushing farther into Riverside County, San Bernardino County and other areas with lower prices, agents said.
One shopper who would have preferred a home in Los Angeles County ended up in Rancho Cucamonga. Dayna Shafer said homes farther inland were larger than what she could find in her price range in Los Angeles. She paid slightly above the $170,000 asking price for a condominium with three bedrooms and 21/2 baths, topping three other bidders. “I had to make some trade-offs and one of them was location,” said Shafer, 28, a chemical engineer.
In a separate report, U.S. housing construction fell by nearly 8% in March, the largest percentage decrease in two years, the U.S. Department of Commerce reported. Despite the decline, builders still started work at an annual pace of 1.65 million units, which is considered robust.
A warm winter in the East and Midwest allowed a larger amount of housing starts than usual, siphoning construction from March, analysts said. “Some of the strength in housing we’ve seen this year was borrowed from the spring,” said Mark Vitner, a senior economist at Wachovia Securities in Charlotte, N.C.
Vitner expects a 5% to 10% decline in homebuilding this year, because of slightly rising mortgage rates and weaker job growth in the U.S. economy. “It means the market is cooling off,” he said of national homebuilding, “but we’re not headed for trouble.”
In Southern California, barring a severe change in consumer sentiment, current conditions could be sustained through much of the year, analysts said. Median prices, meaning half cost less and half cost more, rose nearly 14% last month in Orange County to $332,000, matching the previous record in December.
March sales grew at the fastest pace in 13 years, rising 12% during the month.
Boosting the desire for housing in the region are a stable economy, a constrained supply and historically low mortgage rates. “The market will continue to be strong because those three elements will be likely to continue in Orange and Los Angeles counties,” said Keitaro Matsuda, a senior vice president at Union Bank of California. “I don’t see any immediate danger as far as I can tell.”
An analyst at Real Estate Economics in Laguna Beach, Mark Robbins Boud, said slower job growth in Orange and L.A. counties will cause price gains to moderate in coming months.
But John Karevoll, the analyst who compiled the report, sees faster growth through summer and into fall throughout California. “The trends are quite uniform across the board,” he said.
For the first three months of the year, he said, sales in L.A. County rose to 26,636, the largest first-quarter total since 31,228 were sold in 1989. Prices, he said, also rose 16% during the period, the best since a 25% gain in the late 1980s.
In Orange County, 11,464 homes have been sold, the highest total since 12,035 changed hands in 1989. Moreover, prices recorded a 12% increase during the first quarter compared to a year ago, the best mark since 18.5% in 1989.
There is little indication the market will lose momentum in coming months, Karevoll said, because signs of stress on the market have remained, so far, in check.
For instance, the number of homeowners entering the first stage of foreclosure remains low. The percentage of buyers using adjustable rate mortgages, which are easier to qualify for and may indicate that consumers are stretching to afford homes, edged higher from a year ago to the mid-20s but remain far below peak levels in the mid-60s. And the size of an average down payment increased only by about two percentage points to 16% in Los Angeles and 19% in Orange County from a year earlier, Karevoll said.
“If we saw any changes, any signs that the market was getting weaker or distressed, those signs would pop up somewhere,” Karevoll said. “So far, they haven’t.”
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L.A. County Home Sales and Prices
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