Home Sales Fall Again; Prices Rise

By Annette Haddad

July 19, 2006 12 AM PT

Times Staff Writer

Southern California’s housing slowdown persisted last month as prices rose at their slowest pace in more than six years and sales fell for the seventh month in a row, data released Tuesday showed.

The median price for new and existing homes in the six-county region increased to a record $493,000 in June, according to La Jolla-based real estate tracker DataQuick Information Systems. But the 6% year-over-year rise was the smallest gain since May 2000.

And the higher prices came amid a regionwide decline in demand. The number of homes sold in June fell 17.5% from a year earlier to 29,237. It was the lowest sales count for a June since 1999, DataQuick said.

All six counties in the region reported lower sales on a year-over-year basis, led by Ventura County, where sales plunged 32.3%, and Orange County, where sales fell 26.3%.

Dragging down demand has been the rise in mortgage rates as well as reduced affordability. By some measures, only 11% of Southern California households can afford a median-priced home using conventional financing.

However, most Southland home buyers have opted for nontraditional mortgages that require interest-only or minimum payments to help keep monthly outlays manageable.

Such loans are a key reason home prices continue to rise year over year in many places. Communities where homes are considered more affordable continue to see robust appreciation. The median price in San Bernardino County, for example, rose 14% to $367,000 in June from a year earlier, DataQuick reported. It was the only county to see double-digit appreciation.

Four of the region’s six counties, nonetheless, reached record median prices, including Los Angeles, up 8.8% to $517,000. Orange County’s median rose 7.1% to $646,000, while Riverside County’s gained 7.4% to $422,000 and Ventura County’s increased 7.4% to $627,000.

But declining demand could foreshadow falling prices. San Diego County -- which kicked off the real estate boom more than six years ago -- saw sales decline for more than a year before price growth began to reverse last month.

As reported last week, San Diego’s median home price depreciated 1% to $488,000 in June, making it the first major metropolitan market in California to see a year-over-year drop. It could be a harbinger for the rest of the region.

“We expect more markets to see prices flatten or decline a bit in the second half of this year,” DataQuick President Marshall Prentice said.

A rising supply of unsold homes is helping to put downward pressure on prices. One local multiple-listing service that covers metropolitan Los Angeles sent a letter to its broker-clients this month saying it had more homes listed than at any time in its history -- about 13,000 properties. It also said the time it took to sell an existing single-family house doubled to 48 days compared with a year earlier.

At the current sales pace, it would take 5.2 months to sell all the homes listed for sale in Los Angeles and Orange counties, compared with 2.5 months in late 2004, according to Real Data Strategies, a Brea-based realty consulting firm.

Nonetheless, for some market watchers, today’s bulge of homes for sale seems downright tiny compared with the nadir of the previous real estate cycle in the mid-1990s, when a 19-month supply of homes stacked up.

“We’re getting closer to a normal market,” said Patrick Veling, president of Real Data Strategies. “I’m not going to get nervous about inventory on the market until it hits nine or 10 months.”

Meantime, prospective buyers are capitalizing on the increased competition among sellers to drive harder bargains, real estate agents say. “It’s definitely a buyer’s market, but there are plenty of scared buyers too,” said John Rygiol, a Seal Beach-based agent who works exclusively with home buyers. “That’s the really weird thing right now, the uncertainty. Buyers are hesitant to buy because they think prices will drop.”

(BEGIN TEXT OF INFOBOX)

Sales down, prices still up

Median price and number of new and previously owned homes sold

in June, by county and overall in Southern California

Area: Ventura

Number of homes sold: 1,155

% change from year ago: -32.3%

Median price (thousands): $627

% change from year ago: +7.4%

---

Area: Orange

Number of homes sold: 3,608