Southern California's housing market didn't take a holiday in December: Home prices and sales activity showed double-digit gains, driven in part by first-time home buyers who snapped up relatively affordable condominiums and lower-priced properties.
Analysts said low mortgage rates and expectations that they will soon start to rise continued to draw buyers into the market despite higher prices and a paucity of supply. One large brokerage firm, Coldwell Banker, said that even though its listings in the Los Angeles area last month were 30% below year-earlier levels, some of its agents found themselves working Christmas Day to complete deals.
"We have buyers in droves at our open houses," said Scott Gibson, who heads the Los Angeles operations for Coldwell Banker. "This is the strongest sellers' market we have had in four years."
Led by Los Angeles and San Diego counties, the median sales price for all new and existing homes sold during December in Southern California rose 17%, to $289,000, compared with that month a year ago, according to data released Wednesday by DataQuick Information Systems. The number of sales in the six-county region jumped 18%, to 29,480, compared with December 2001, with Riverside County showing particular strength.
In Los Angeles County, December's median price surged 19.7% to $279,000, and sales were up 16.1% to 10,207. In Orange County, the median sales price last month rose to a record $385,000, up 16% from a year earlier, and sales that month increased more than 14% to 4,435.
The December results capped one of the region's strongest performances in several years. For 2002, the median sales price for all homes sold in Southern California hit a record high of about $269,000, up 16.5% compared with the previous year, according to DataQuick. In Los Angeles County, the median sales price for 2002 rose 17% from the previous year to $262,000, and Orange County showed a 16.8% gain to $354,000.
"Last year was phenomenal," said Newport Beach real estate broker Ron Millar, who reported that he and his partner sold more than $100 million in homes last year. "It never slowed down."
Although Southern California's housing market is expected to cool down this year, brokers say the strong performance in 2002 has spilled over to the early part of January, normally a slow month.
The high end of the real estate market remains spotty, they point out, but demand for lower-priced entry-level homes is stronger than ever.
"The activity is actually sort of fierce, mostly because of the lack of inventory," said Richard Mathies, executive vice president of Dilbeck Realtors, which sells homes across the San Fernando and San Gabriel valleys. Anything at the low end of the market, he added, "is sold almost instantaneously just because there is so little of it."
Leslie Appleton-Young, chief economist for the California Assn. of Realtors, noted that first-time buyers accounted for 36% of all home purchases last year.
"It's a very healthy part of the market," Appleton-Young said. As mortgage rates start to rise, "you will get even more demand because people want to get in before it's too late."
Jonathan Goldstein and Ina Burke can attest to the intense competition for low-priced homes in the last year.
When the newlyweds went to an open house in August for a nearly century-old home in the Cypress Park area of Los Angeles, there were about 10 other couples inspecting the fixer-upper with 1970s shag carpeting. They beat out four other bidders with a $240,000 offer that exceeded the asking price.
"There just didn't seem to be anything around," said Goldstein, 38, an actor and dialogue coach.
Analysts say it is crucial that the first-time home-buying market remains vibrant.
"It is the first step in the housing market ladder," said G.U. Krueger, vice president of market research for Institutional Housing Partners, an Irvine-based real estate venture capital firm. "If that segment gets stuck, the whole move-up chain sort of unravels."
A growing number of first-time buyers are opting for condominiums largely because they are more affordable than detached homes. That has pushed up condo prices in recent months. During December, the median condominium price in Southern California soared 26.2% to $231,000, according to DataQuick.
"More people are saying that they would consider condos because they think they are being priced out," said Los Angeles real estate agent Michael Caldwell of Housing Solutions.