Home Sales Power Onward at Record Rate
Nationwide sales of existing homes soared at a record pace in January, defying projections and providing further evidence that the economy may be pulling out of the recession, a report released Monday found.
The 16% increase from December was the largest ever, as sales reached an annualized rate of 6million homes for the first time, said the National Assn. of Realtors, which attributed the surprising growth to a mild winter combined with the gradual improvement in consumer confidence and the reviving economy.
The report, which helped boost the stock market and shares of home builders in particular, comes on the heels of a Census Bureau study that showed the percentage of homeowners rose to record highs last year in California and the U.S.
The U.S. homeownership rate, a barometer of financial and social stability, has been climbing steadily since the 1990s, and last year approached 68%. In California, homeownership jumped in counties as varied as Ventura, San Diego, Fresno and Sacramento, although there were no gains in the two urban centers, Los Angeles and San Francisco.
Analysts said the improving homeownership rate in recent years can be attributed almost entirely to gains among an aging and more prosperous population. And those long-term demographic trends are continuing to push home sales.
In releasing the strong January sales report, Martin Edwards Jr., president of the National Assn. of Realtors, said the housing market was being spurred by the large number of immigrants and the growing number of baby boomer children who are entering prime years of home buying.
Analysts said they expected home sales numbers in February to remain strong, boosted by the warm weather and mortgage rates, which trended downward again early this year. But longer range, sales are likely to weaken as pent-up demand dissipates and interest rates head back up, said Celia Chen of the Dismal Scientist, a Web-based economic research provider.
In the January report, sales were strongest in the West. California’s sales of existing homes jumped 16% last month, thanks largely to a flurry of activity in the Los Angeles area.
The median home price nationwide advanced sharply last month, climbing 10% to $151,100. In California, the price of a typical detached home jumped 17% over the month to $285,860, said the California Assn. of Realtors.
“There was a lot of pent-up demand for housing in the wake of Sept. 11, coupled with concerns about the direction of the California economy,” said Robert Bailey, president of the Los Angeles-based group. “But home buyers who sat on the sidelines were back in the game last month.
“There’s every indication that California is headed into a strong home-selling season this spring,” he said.
If sales remain strong, that should help keep the homeownership rate growing.
In marking its second straight year of rising ownership, California grew nearly four times faster than the nation last year. The boost came from counties experiencing record levels of ownership, including several in Southern California. Ventura jumped last year by more than 8 percentage points to 74.4%, San Diego expanded by nearly 5 percentage points to 64%, and Orange County grew by 3.5 percentage points to 65.8%.
In California, the share of households that own homes rose about 1percentage point last year to 58.2%, according to the Census Bureau.
But the gains were spread unevenly within the state and showed a widening chasm between Los Angeles County and surrounding--and more affluent--areas such as Orange and San Diego counties. In Los Angeles County, homeownership rose nearly 1 percentage point to 50.1%, but the gain was too small to be considered significant.
In the latest report, Los Angeles is nearly 18 percentage points below the average rate of homeowners in U.S. metropolitan areas, the largest disparity that has ever existed for the county since the Census Bureau began keeping records in 1984.
“There’s a gap between wages and housing prices in this region, and it is widening despite the recession,” said Peter Dreier, a professor at Occidental College, who has backed an effort to create in Los Angeles a housing trust fund. “That’s a serious obstacle to homeownership.”
“For homeownership to move up, we have to provide more opportunities for people to buy homes without displacing renters,” said Dowell Myers, a demographer at USC. “Given our land constraints in Los Angeles County,” he said, “we need to build condos or townhomes.”
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Putting Down Roots * The percent of residents owning their homes in the United States and California rose to record highs last year.
2000 2001
U.S. 67.4% 67.8% California 57.1 58.2 Fresno 56.2 63.3 Los Angeles 49.0 50.1* Oakland 60.3 58.5* Orange County 62.3 65.8 Sacramento 61.6 66.4 San Bernardino/Riverside62.6 62.4* San Diego 59.1 64.0 San Francisco 48.9 48.6* San Jose 60.9 63.0* Ventura 66.2 74.4
*Change is not statistically significant.
Source: Census Bureau
