Home Prices in State Rise 22.3%
The median price of homes and condos in California surged in May to a record $368,000, as buyers scrambled to become homeowners amid rising mortgage interest rates.
The May median price -- the point at which half the homes sold for more and half for less -- amounts to a 1.9% jump from April, but a 22.3% increase over May 2003, the strongest year-over-year percentage jump recorded by DataQuick Information Systems.
A total of 56,650 new and resale houses and condos were sold statewide last month, a 4.5% drop from April and a 2.6% increase from May 2003.
The gradual climb in mortgage interest rates in recent weeks has put pressure on would-be buyers to find a home and lock in financing.
“There are just far more buyers out there than there are homes in the market,” said John Karevoll, a DataQuick analyst.
Although demand has helped push prices to new records for several months, prices have been reined in a bit by an increase in new listings as owners seek to sell before interest rates elbow buyers out, Karevoll said.
Over the last two months, the number of homes coming on the market has nearly doubled in most of the metropolitan areas, according to DataQuick.
“The perception out there is that the strong rate at which homes have gone up in value is due to level off a bit, so now might be the best time to put a home on the market,” Karevoll said.
The average rate of 30-year fixed mortgages in May ranged from 6.12% to 6.34%, according to Freddie Mac. The rates have been above 6% since April 29. Last week, the average rate was 6.32%.
The typical mortgage payment that home buyers committed themselves to paying in May was $1,750, up from $1,624 in April, and up from $1,297 in May 2003.
The way buyers are financing home loans could signal that the state’s housing prices may be close to reaching their peak, particularly in the more expensive metropolitan areas, like San Diego and Orange counties.
San Diego leads the state in the number of buyers who have taken on an adjustable rate mortgage, Karevoll said.
The ARMs make it easier for buyers to qualify for a loan, so a jump in the number of ARMs being issued can signal that high prices are squeezing buyers out of qualifying for fixed-rate loans, he said.
“We’re convinced that we’re seeing signs of that in San Diego, and
Orange County’s median sale price rose 36.4% in May to $543,000, the biggest percentage increase in the state that month. The highest median sale price for the month was $642,000 in Marin County.
