Housing Price Hits Record in July
Rising interest rates have the real estate community fretting that the party is coming to an end, but the shindig sure was in full swing in Los Angeles County last month.
The median price for homes sold in the county hit an all-time high of $328,000 in July, up 5% from June -- and up more than 23% from a year earlier -- according to figures released Thursday.
The year-over-year increase was the strongest since May 1989, the peak of the region’s last housing boom.
The number of homes sold in the county rose nearly 10%, with 11,926 new and existing homes and condominiums changing hands. That was the second-largest monthly count on record.
“Things haven’t slowed down yet,” said John Karevoll, an analyst at DataQuick Information Systems, which compiles the statistics.
Data for the rest of Southern California will not be ready until next week but are expected to be just as dramatic. Karevoll estimated the July median price for all homes sold from San Diego to Ventura counties at $328,000, as well. Regional sales -- led by gains in the Inland Empire -- were likely to be the highest since September 1988, he said.
Some real estate experts wondered whether the latest burst of activity would prove to be the finale for a showy market that has seen 29 consecutive months of double-digit price increases. Indeed, the July numbers don’t reflect the recent jump in interest rates because it is likely the properties tallied by DataQuick had been in escrow for a month or so.
Demand for home loans nationwide has been falling in recent weeks, as mortgage rates climbed from a generational low of 5.21% in mid-June. The average rate for 30-year fixed mortgages eased a bit this week to 6.24%, down from the one-year high of 6.34% in the previous week, mortgage giant Freddie Mac reported Thursday.
The mortgage rate ascent has had a particularly chilling effect on refinancings and has pushed brokers and real estate agents to turn to adjustable-rate mortgages to help more buyers qualify for loans. In July, a third of all new home loans in Los Angeles County were ARMs -- the highest for the county since June 2000, according to DataQuick.
Analysts expect mortgage rates to bounce around a bit with volatile financial markets. But eventually, consumers will have to get used to the idea of higher rates, says Scott Gibson, president of real estate firm Coldwell Banker’s Los Angeles division. And when that happens, he figures, it’ll take some of the air out of the market.
“I expect we’ve just about peaked on prices,” Gibson said.
In July, though, all categories of homes in Los Angeles County showed strong appreciation: Existing single-family houses rose 23% from a year earlier to $342,000, and new homes also climbed 23%, to $392,750. Condominiums, the most affordable option for buyers, posted the largest gain, up 26% to $258,000.
Gibson and other brokers said last month’s strong sales count was partly because of the increasing number of properties on the market, as more homeowners decided to sell and buyers sought to get into the market before rates rose again.
“Inventory’s finally building out there, which means fewer multiple offers and more choices for buyers,” Gibson said. “That usually means prices are going to settle down too.”
