Low Mortgage Rates Spur Sharp Rise in Southland Home Prices
The median sales price of a Southland home jumped nearly 20% in January as buyers dismissed concerns about a potential war with Iraq and terrorism in the United States to take advantage of low mortgage rates.
Brokers said anxious buyers who feared being priced out of the market pounced on well-located homes across the region, sparking bidding battles for everything from entry-level condominiums to million-dollar properties.
“It’s all interest-rate-driven,” said Alan Long, president of Los Angeles-based DBL Realtors, which posted a 25% year-over-year increase in sales last month.
“Everybody seems to disregard everything else: news of war, unemployment, a bad economy. They don’t seem to be paying attention to any of this stuff if rates are low.”
During January, the median price of all homes and condominiums sold in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties hit $283,000, a 19.9% increase from the same month last year, according to a report released Wednesday by DataQuick Information Systems, a real estate research firm. Sales in the six-county region increased 3.4% to 22,767 properties.
San Diego County -- where a robust economy continues to generate jobs -- led the region with the largest year-over-year increase in the median price, a 23.1% rise to $336,000, DataQuick reported.
In Los Angeles County, the region’s largest housing market, the median price rose 18.3% to $278,000. The median price in Orange County surged 19.8% to $369,000 -- the highest in Southern California.
The median price, the point at which half of the homes in a given market sell for more and the other half for less, is considered more statistically accurate than the average price because it filters out the effect of homes sold at the extreme high and low ends of the market.
Most housing analysts are projecting that regional home sales and price appreciation will taper off this year compared with 2002, one of the strongest on record. But the January results showed that last year’s momentum has spilled over into this year, brokers say.
The Mission Viejo office of Coldwell Banker, for example, sold 50 homes in January, nearly matching last year’s strong performance despite prices that are about 20% higher.
Office manager Mark Griffith says there are waiting lists for new homes in the planned community of Ladera Ranch, and sellers who are not overly aggressive on their asking price can count on a sale in as little as two weeks.
“It’s very busy,” Griffith said. “Everybody has got several buyers they are working with.”
Pasadena agent Dominic de Fazio put three houses on the market last month, and sold all of them with multiple offers, including a $499,000 Altadena home that received four bids and sold for more than $15,000 above its asking price.
“We put it on the market in early January and sold it within a week,” he said.
De Fazio and other agents said that the threat of war and concerns about domestic terrorism have come up in discussions with clients, but very few have postponed or canceled deals as a result.
“People love to talk about it but it hasn’t stopped anybody from doing anything,” said Wendy Furth, a San Fernando Valley Remax agent.
Mortgage rates remain near their all-time lows and have been falling for the last month. Last week, the rate on a 30-year-fixed, conforming mortgage averaged 5.86%, according to a survey by Freddie Mac.
The more immediate concern for many buyers is to stay ahead of rising prices.
Former Thousand Oaks residents Cherylee and John Gardea gave up trying to find a suitable home for less than $300,000 in that area. Instead, the couple switched their focus to Santa Clarita, where they acted quickly to buy a four-bedroom house for $286,000. The Gardeas and their two daughters moved in last weekend.
“We wanted to live in Thousand Oaks but it was outrageously overpriced,” said Cherylee Gardea, 37, an aerobics instructor.
“We are so lucky to get this house at this price.”
In the San Gabriel Valley, buyers priced out of the market are traveling east on the newly extended 210 Freeway to look at homes in Fontana and Rancho Cucamonga, where prices are about $50,000 less than comparable properties in the west end of the valley, said Marty Martinez, a Century 21 broker .
“Now they’re thinking it’s not too far away.”
