Home Prices Hit New Highs
Defying some experts’ predictions, home prices in Southern California reached new peaks in November as the pace of sales held steady in what was typically a slow time of year.
The median price in each of the region’s five counties rose at least 23% from the same month in 2003. The number of homes sold dipped 0.6%, to 27,459, but it was the third-strongest November since 1988, according to DataQuick Information Systems, which compiles monthly housing statistics.
The median home price -- the point at which half sold for more, half for less -- for all of Southern California was $415,000, up 23.5%.
With the exception of January and July, year-over-year price records were set every month this year, according to DataQuick.
“We expected price increases to ease back and sales count to taper off,” said John Karevoll, DataQuick’s chief analyst, “but they’re about the same as they have been.”
The Inland Empire, where the region’s median house prices are the lowest, posted the sharpest increases in November. San Bernardino County led the pack with a 34.6% run-up, followed by Riverside County’s 29.1% gain.
In Los Angeles County, which accounts for one-third of the region’s sales, the median rose 22.7% from last year. In Orange County, the region’s priciest, the median climbed 23.8%. Ventura County saw a 25.8% increase; San Diego County, 23.9%.
Numbers like that spur UCLA economist Christopher Thornberg to use the word “bubble” when describing the local housing market.
What’s driving the price rises “is nothing but the pure forces of speculation,” Thornberg said. Buyers are betting that the house or condo they purchase today will continue to appreciate at a high rate of growth.
“It’s insane,” he said. “You can’t sustain 23% increases in prices.”
The November sales numbers were bolstered in part by the timing of Thanksgiving. There were two extra business days this November compared with a year earlier.
And there was evidence in the data that the market is slowing and prices are flattening from the first half of the year. The region’s median rose just 1.2% from October and in San Diego and Ventura counties, the month-over-month median declined a bit. Likewise, there were fewer home sales in most counties when compared with October as the number of homes on the market swelled.
According to Multi-Regional Multiple Listing Service Inc., which covers much of Southern California, the stock of homes rose 88% to a 3.5-month supply in the first 11 months of the year compared with the same period a year ago.
The sense of a slowdown was not lost on Susie Flores. She agreed to sell her Oak Park home in Ventura County this month for $800,000 -- nearly double what she paid for it in 1998 -- but the 44-year-old nursery manager felt like she left some money on the table. That’s because six months ago, her fiance sold his Camarillo home for 1 1/2 times what he paid.
“I didn’t make a killing,” Flores said. “Had I sold my house in the spring, I would have gotten more money.”
Sellers like Flores are keeping the local housing market humming. After putting her home up for sale, Flores bought a bigger house in the same community for $1.34 million.
A big reason for the market’s endurance has been persistently low mortgage rates.
Despite the Federal Reserve raising short-term interest rates five times this year -- the latest being Tuesday -- rates for home loans remain near historic lows.
As of Tuesday, the rate on a 30-year fixed mortgage was 5.68%, according to the Mortgage Bankers Assn. The cost of borrowing funds for adjustable-rate mortgages is even lower.
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Median price for new and resold homes (In thousands) Southern California counties % change County Nov. price from Nov. ’03
San Bernardino $284 +34.6% Riverside 346 +29.1 Ventura 507 +25.8 San Diego 487 +23.9 Orange 541 +23.8 Los Angeles 416 +22.7 So. California 415 +23.5
Source: DataQuick Information Systems
