Home Sales Still Robust as Rates Stay Low
Home prices in Los Angeles County rose again last month from the prior year, as a low supply of houses and condominiums for sale and favorable interest rates pushed up demand.
The median price of new and existing homes and condos sold in February was $352,000, the same as January, which was a record. It was a 24% increase from the median of $284,000 a year earlier, DataQuick Information Systems of La Jolla reported Monday. The median price is the point at which half the homes sold for less and half for more.
During February, 7,723 houses and condos sold in Los Angeles County, a decrease of 3.8% from the 8,030 sold in January but a 2% jump from the same time a year ago. That made the month the second-strongest February of the last 15 years, just slightly behind February 2002, DataQuick found.
Still, a chronic shortage of homes for sale in the region is creating tough competition among prospective buyers, many of whom are eager to get in the market while interest rates remain low. But with few homes available, many are walking away frustrated, said Heather Roy, a Coldwell Banker real estate agent.
These potential buyers, she said, “are doing everything right,” including getting pre-qualified by lenders. Yet bidding is fierce.
“You find a home in the [$600,000] range and people come from everywhere because there are so few of them,” she said.
It’s precisely for that reason that Roy, who normally sticks to selling homes in the Larchmont area of Los Angeles, recently expanded her territory so she has more homes to show her clients.
Regardless, the paltry inventory and low interest rates should keep the market healthy for now, analysts said.
“I’m not nervous about it,” said John Karevoll, an analyst with DataQuick. “I don’t see the danger signs some people do.”
Many, including Karevoll, believe home prices will start decreasing only once interest rates begin rising, and only then, some say, if they rise to at least 8.5%. Currently, the interest on a 30-year fixed-rate mortgage is 5.375%, according to Debora Blume, a spokeswoman at Wells Fargo Home Mortgage.
Others believe home prices will decrease only if there is a sudden economic downturn in Southern California, with a major loss of jobs.
“The only real way for prices to go down is when there is an economic collapse,” said John Landis, professor of city and regional planning at UC Berkeley. “And I don’t think that is on the horizon for Los Angeles.”
