On the Home Front, Median Prices March to Another Record
When the U.S. began its assault on Iraq, John Aaroe figured the aftershocks would reach all the way to his real estate office in West Los Angeles.
“Considering the global situation, I expected a wait-and-see attitude,” said Aaroe, who runs a division of Prudential California Realty.
“The reality is that this did not happen.”
In fact, buyers were so eager that they bid prices up even as the war raged. The median price of a house in Los Angeles County in March was a record $290,000 -- 15.5% higher than a year earlier, according to data released Thursday by DataQuick Information Systems.
Much of the activity was driven by low interest rates, which for a 30-year fixed mortgage averaged 5.745% last month.
“You can’t beat the rates, as they say,” said Richard Mathies, executive vice president of Dilbeck Realtors, which focuses on the San Gabriel and San Fernando valleys.
In March, buyers keen on locking in favorable rates created bidding battles, brokers said. The number of homes and condominiums sold did slip -- by 8.8% -- but brokers said that was because of a dearth of listings in a robust market.
“The majority of the disputes and conversations I hear are from buyers who lost out” on deals with multiple offers on a single property, said Alan Long, president of Los Angeles-based DBL Realtors.
All that was good news for sellers such as Pamela and Luis Cruz. After the birth of their second daughter, they decided to put their three-bedroom West Covina home on the market. When their agent told them how much they could ask for it, “I was floored,” Pamela Cruz said.
The couple accepted the first bid of $315,000 because they liked the buyers.
Then, when the Cruzes went shopping for a new, larger place to live, they discovered what it was like on the other side of the game: They had to offer more than the asking price to get the four-bedroom house they decided on, also in West Covina, paying $362,000.
But they ended up satisfied with the two transactions. “It worked out perfectly,” Pamela Cruz said.
There were horror stories in March too, at least from the buyer’s perspective: Long said a one-bedroom condo in West Hollywood priced in the low $200,000s snared 22 bids the second day it was listed and sold that day for about $250,000.
Scott Gibson, who heads the Los Angeles operations for Coldwell Banker, said an average of 26 potential buyers had been showing up at every open house the firm had hosted in Los Angeles County.
“There’s a tremendous amount of interested buyers out there,” Gibson said. “A lot of that continues to be interest-rate-driven.”
The uncertainty before the war started last month didn’t seem to faze people. Actually, according to Chapman University economist Esmael Adibi, war concerns helped create the buying boom by steering investors into the bond market, which kept yields low. That brought down mortgage rates.
With the war drawing to a positive conclusion, Adibi said he expected rates to start increasing soon, which could cause home prices to level off.
Last month’s data suggested that price appreciations, at least, are slowing: The 15.5% annualized increase in March was the lowest since August.
Entry-level buyers hope that continues. With the county’s median price at $290,000 -- which means half of homes in the county sold for more and the other half for less in March -- a lot of first-time buyers just can’t afford to purchase property.
“I would actually like to see it level off a little bit,” said Mathies of Dilbeck Realtors. “We still want to have a market where a first-time buyer has an opportunity.”
But mortgage rates continue to be attractive. The average 30-year fixed interest rate dipped to 5.82% in the most recent seven days, according to Freddie Mac’s weekly nationwide survey, down from 5.85% last week.
