Six months of gains in Southern California’s median home price were wiped out in January while sales activity dropped sharply, further signs that the region’s once-hot real estate market continues to lose steam.
The statistics, released Wednesday by DataQuick Information Systems, a La Jolla-based real estate research firm, suggest that the market is making a “soft landing” of flattening prices and fewer sales after sizzling gains during the six-year boom, analysts said.
Many homeowners, who were quick to put their homes up for sale a few months ago in hopes of scoring swift and easy profits, are seeing more price resistance now. Buyers are taking more time to shop around, and are making more-modest offers.
“We’re starting to sense a shift from a strong sellers’ market to more of an equilibrium,” said Rich Roberts, vice president of marketing for ZipRealty Inc., a national brokerage based in Emeryville, Calif.
“But it’s a slow-moving transition, which is good,” he added. “We’re not seeing a bubble bursting.”
Michael Hua epitomizes the new, more subdued attitude of the region’s buyers and sellers.
When he decided to list his Monterey Park home six weeks ago, he priced it $20,000 below the most recent comparable sale in his neighborhood.
After getting a couple of inquiries, he eventually agreed to sell it to a buyer offering his $539,000 asking price. The house is currently in escrow.
“The market is not going down, just slowing down,” Hua said.
The result of such buyer-seller moderation: Only 20,085 homes changed hands last month, down 30.6% from December and off 7.4% from January 2005, according to DataQuick. It was the lowest level of sales for any January since 2001, when the market was still heating up.
The median price for the six-county region fell to $469,000, down 2.1% from December and the lowest since July.
Year-over-year comparisons also showed a cooling market. The median price in January was 13% higher than the same month a year ago, matching the same year-over-year gain in December, which was the smallest annual increase since March 2002.
Analysts, however, were reluctant to draw too many conclusions from January, which typically is a slow month for housing activity, coming right after the holidays.
“The median tends to peak in the summer and tends to retreat in the fall,” said Leslie Appleton-Young, chief economist for the California Assn. of Realtors.
John Karevoll, DataQuick’s chief analyst, expects year-over-year price gains to continue to fall, hitting single-digit percentages by this summer. At the same time, he also sees the median price hitting a new record by March. The median is the midpoint of all prices, with half of the homes selling for more and half selling for less.
“As we approach single-digit appreciation, we also approach a more sustainable and stable market,” Karevoll said.
The region’s housing market is returning to normal, he said, after a period when year-over-year price gains exceeded 20% during the peak of the boom in 2004 and the first half of 2005. Those gains prompted talk of a regional housing bubble.
Karevoll said the downshifting in sales and price gains was happening at roughly the same pace regionwide. Such a gradual slowdown is helping to avert a more serious downturn, he said.
“We’re not seeing anything that would precede a steep drop in the market,” he said.
The median prices in every county -- Los Angeles, Orange, Ventura, Riverside, San Bernardino and San Diego -- declined in January from December even though they rose from year-ago levels.
Southern California’s appreciation rate is starting to fall more in line with the rest of the nation. The national median existing single-family home price was $213,000 in October through December, up 13.6% from $187,500 in the year-ago quarter, the National Assn. of Realtors said Wednesday.
Sales of existing homes nationwide were flat in the fourth quarter at a seasonally adjusted annual rate of 6.9 million units, the Realtors association said.
Meanwhile, new Federal Reserve Chairman Ben S. Bernanke on Wednesday cited the slowing U.S. housing market as a risk to the economy’s expansion, although he said a “moderate softening” seemed more likely than a “sharp contraction.”
Santa Monica chiropractor Ralph Alvy says the market is definitely slower than two years ago. Then, the townhome owner saw his neighbors getting numerous offers, so he decided to list his dwelling too. Within days, he received five or six offers and wound up making a deal for $40,000 above his asking price.
When Alvy decided to put his current home up for sale in January, he was still expecting to get numerous bids. But this time around, it took two weeks before getting even one offer, and that was after reducing his asking price $20,000.
“I was surprised when we didn’t get multiple offers. That was standard a couple of years ago,” Alvy said.
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Median price in January of new and resold homes, overall and by county
*--* Median % change price from Area (thousands) July ’05 San Bernardino $355 +8.2% Riverside 410 +6.5 Ventura 608 +5.0 Los Angeles 487 -0.2 San Diego 490 -1.2 Orange 582 -3.2 S. California 469 0.0
Source: DataQuick Information Systems