California Median Home Prices Top Record $300,000

By DARYL STRICKLAND

April 26, 2002 12 AM PT

TIMES STAFF WRITER

Median home prices in California topped $300,000 for the first time last month, as tight supplies and low mortgage rates continued to drive the market.

The median price of a single-family home surged to $305,940, up nearly 19% from a year earlier, the California Assn. of Realtors said Thursday.

Sales of existing single-family homes grew 13% in March from a year earlier, to an annual rate of 586,230, the group said.

Buyers were drawn to the market largely by low mortgage rates and greater consumer confidence in March, the group said. In addition, sellers were helped by a diminishing number of available homes, boosting prices. In tight markets such as Southern California, multiple bids became more common.

California posted the highest median prices in the nation last month--exceeding even Hawaii, where the median dropped from $312,800 in February to $299,000 in March, according to industry officials.

The March figures in California were up 2.2% from February. But escalating prices are keeping more people out of the market for starter and move-up homes, industry officials noted.

“While it is good news for homeowners,” said CRA President Robert Bailey, “it’s a cause for concern as affordability becomes a serious issue for more and more families in the state.”

Absent a marked increase in production statewide, a separate study sponsored by the Fannie Mae Foundation said people of all income levels will find fewer options to purchase homes, or will be unable to afford rental homes without doubling or tripling up at a much greater rate.

Affordable housing is becoming more scarce nationwide. In March, the median, or midpoint, price for an existing home was $153,000, a 6.7% increase from a year earlier, according to a report released Thursday by the National Assn. of Realtors.

Sales nationwide fell 8.3% to an annual rate of 5.4 million units in March from an upwardly revised pace of 5.89 million units in February. But combined with record sales earlier this year, the robust pace during the quarter exceeded the group’s forecast.

Low mortgage rates have kept home seekers in the market even as prices increase, said Martin Edwards Jr., president of the national real estate agents group, based in Washington.

Interest rates on 30-year fixed mortgages remained under 7% for the third week in a row.

Affordability for many buyers remains favorable, Edwards added, though in certain high-priced markets, the industry needs to focus more on programs that allow low- and moderate-income renters to become first-time homeowners.

But in California, those potential buyers and others are squeezed by an inadequate supply of housing.

Home builders must double their rate of production each year of this decade in order to fill the state’s housing needs, the Fannie Mae Foundation report said. The conclusion echoes findings from another study released earlier this week.

That study released earlier said that cities and counties should be exempted from state-mandated requirements to plan for low-income housing if they allow a certain number of rental and multi-family units to be built.

The study, by USC demographers Dowell Myers and Julie Park, suggests that one unintended consequence of state laws designed to increase the amount of low-income housing is political bickering among local officials that “has helped turn the spigot off of new housing construction.”

“The housing crisis in California is one of inadequate supply of all housing, and of multifamily housing in particular, regardless of the income level of the occupants,” Myers said. “Once housing can be provided in the required volume, price escalation will ease and all housing consumers will be better off.”

But state officials said housing laws are not to blame. “There’s no way we could agree with any assessment that the housing element process in any way limits or results in inadequate housing production,” said Cathy Creswell, deputy director for the Department of Housing and Community Development that administer state housing laws.

State law requires cities to plan for, but not necessarily build, low- and moderate-income housing. The USC study says local governments should not be required to complete those plans if they build a certain number of rental homes, regardless of whether the units are affordable for low- and moderate-income residents.

The proposal would not lead to more luxury housing because the need for low- and middle-income housing is overwhelming, Myers said. The report added that new construction could be spurred by cities receiving a larger fiscal incentive to build housing, and by restoring federal tax credit subsidies for developers of multifamily housing.

Except during the years of the Great Depression, the study says the slow pace of development during the 1990s is unprecedented in California.

Preliminary figures show that 148,300 units were built last year. The state estimates 220,000 or more new homes are needed annually to keep pace with growth. The stock of vacant rental and houses is now virtually depleted, the study says.

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High-Priced Homes

The 10 cities and communities in California with the highest median home prices in March were:

Pacific Palisades $872,500

Beverly Hills 814,000

Palos Verdes Estates 760,000

Manhattan Beach 754,750

Newport Beach 736,000

Malibu 727,500

Burlingame 725,000

Carmel/Pebble Beach 725,000

Laguna Beach 707,500