Home Prices in Southland Rise 27% in May
Southern California home prices continued to set records in May, as buyers rushed to get into the market before interest rates moved higher.
The median price -- the point at which half the homes sold for more and half for less -- rose to $396,000 in the region’s six major counties in May, a 27% increase from a year ago and the largest percentage increase on record, DataQuick Information Systems reported Wednesday.
In Orange County, the region’s most expensive market, the median price rocketed 36% from a year earlier, to $543,000, the biggest year-over-year gain for any Southern California county since DataQuick began tracking data in the late 1980s.
“Orange County is nearing a point in the cycle when things start to readjust,” said DataQuick analyst John Karevoll. “The big question is, ‘Do prices start to level off or go down?’ ”
Riverside County saw the next-largest leap, with the median price rising 32% to $317,000. The median price In Ventura County surged 27%, to $492,000; 26.9% in San Bernardino County, to $236,000; and 21% in San Diego County, to $454,000.
Los Angeles County prices, reported last week, gained 26% to a record median of $394,000.
Because of a lack of inventory, the number of houses and condominiums sold throughout the five-county region slowed to 31,151 in May, a decline of 5.4% from April, according to DataQuick. Sales in Orange County dropped 7.6% from last year and sales in Ventura County dropped 11.5% from the same time the previous year, DataQuick found. Los Angeles County saw sales fall 3.1%.
“May sales would have been much higher if there had been enough homes for sale,” said Karevoll. “There just hasn’t been enough inventory to satisfy demand.”
Kenneth Rosen, a real estate economist at UC Berkeley’s Haas School of Business, cautioned that the state’s red-hot home prices were likely to cool within a year.
“Six to nine more months of this and there will be a slowing,” he told a gathering of about 27,000 housing industry officials meeting this week in San Francisco. “Not a crash, but things will slow down.”
He and other experts attending the San Francisco conference were careful not to refer to the state’s housing market as being in a “bubble.”
“But it is excessive,” Rosen said. Still, he said the economy would have to reverse course and fall into recession to cause prices and sales to collapse.
The nation’s housing wealth continues to fuel the national economy, said William Apgar of Harvard University’s Joint Center for Housing Studies. He said home equity nationwide grew 6% in 2003, to $8.4 trillion.
But he also warned that the housing market was poised to slow. It will be “a gradual coming down to earth,” Apgar said.
Despite the housing-price records set in May, some realtors are starting to see home prices flatten and even drop slightly, as more homes are listed for sale and some buyers are priced out of the market by the recent interest-rate increases.
Richard Rose, a realtor with Coldwell Banker Premier in Moorpark, said prices have recently declined by about $30,000 in his area, which includes Simi Valley and Thousand Oaks, as more homes have been listed for sale. In Moorpark, for example, there were about 20 homes for sale in April and now there are more than 90.
“We’re seeing the inventory build up, and houses are not moving,” said Rose. “It’s a much needed correction.”
Karevoll said that although there was more inventory, “we have to remember inventory has been at record lows the past half year.”
