Housing Sales, Costs Surge

A slew of fence sitters jumped into Southern California’s housing market last month, boosting home sales and price increases to their highest levels in more than 14 years.

The August median price for homes sold in the six-county region, from Ventura to San Diego, rose 22% from a year earlier to $338,000, according to DataQuick Information Systems, which released the statistics for the entire region Thursday. The year-over-year gain was the strongest since May 1989, when the median price of new and existing houses and condominiums was $176,000.

San Bernardino County, the Southland’s most affordable area, saw the largest price increase last month, jumping 29% to $207,000. The median price of all homes sold in Los Angeles County in August was $338,000 -- up 27% from a year earlier.

Sales overall for the Southland also hit their highest monthly count since the late 1980s, with 34,437 properties changing hands in August, 12% more than a year earlier.

Although all six counties posted record prices last month, Orange County soared above the rest with a $470,000 median price for an existing single-family house. The median price for newly built homes sold in Orange County last month was $565,000, and it was $305,000 for existing condominiums.

Tony Mazeika, an Associated Realtors agent in Mission Viejo, said the numbers were particularly striking because, up until recently, prices had been climbing sharply but sales volume remained low. DataQuick reported that the number of homes sold in Orange County last month -- 5,511 -- was the highest of any month since July 1988.

That “tells me people are deciding to jump in now,” Mazeika said. In August, he noted, “interest rates went up a full point, the kids were getting ready to go back to school.... People thought they’d better get off the fence finally.”

Some agents said they were surprised at the strong figures because higher interest rates have reduced consumers’ buying power. Homes that closed in August are reflective of deals that were struck in June and July, when interest rates began climbing from a generational low of 5.21% in mid-June.

Although rates generally have been increasing, for the week ending today, the average rate for a 30-year fixed mortgage fell to 6.01% from 6.16% the week before, mortgage giant Freddie Mac said. The average rate on a 15-year mortgage fell to 5.30% from 5.46%. The average one-year adjustable-rate mortgage slipped to 3.81% from 3.87%.

The effect of higher interest rates was apparent last month in expensive Orange County, where nearly half of all buyers used ARMs to purchase their homes. That compares with 38% in July and 29% a year ago.

“It’s certainly an increase worth nothing,” said DataQuick analyst John Karevoll. He said the use of ARMs peaked at 64.5% for Southern California in the fall of 1988. In that previous cycle, prices in the region generally kept rising until 1991, when the Southland housing market began its sharp descent.

Some agents said prices could keep soaring at the current rate. But others said activity would begin to level off as usual in the fall.

“The figures for August have nothing to do with what happened in August,” said Mark Griffith, who manages the Coldwell Banker office in Mission Viejo. “Those numbers have to do with people buying and selling in June and July, your typical summer activity.”

DataQuick President Marshall Prentice agreed, saying the appreciation rate of 20% “may last a couple of months but should be back down into the teens by the end of the year.”

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Sudden jump

The Southern California housing market continued its upward spiral in August, pushed by higher demand and tight supply.

*--* # sold # sold % Med. price (in thousands) % Area Aug.’02 Aug.’03 chg Aug.’02 Aug.’03 chg L.A 10,808 11,874 +9.9% $267 $338 +26.6% O.C 4,678 5,511 +17.8% $370 $435 +17.6% Riv 4,801 5,332 +11.1% $215 $260 +20.9% S.Berdo 3,622 4,066 +12.3% $160 $207 +29.4% S.Diego 5,125 5,919 +15.5% $339 $389 +14.7% V.C 1,698 1,735 +2.2% $334 $404 +21.0% S.Cal 30,732 34,437 +12.1% $278 $338 +21.6%

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Source: DataQuick Information Systems