Home Prices Hit New High
Southern California home prices returned to their record ways last month, but the number of sales declined as the region’s housing market continued its shift from red-hot to lukewarm, data released Tuesday showed.
In February, the median home price in the six-county region reached a record $480,000, up 12.9% from a year earlier. Last month’s figure also represented a turnaround from January, when the median fell 2.1% to $469,000 from December.
But the number of homes sold in February, 19,905, was the lowest in five years, research firm DataQuick Information Systems said. Across the region, sales declined 7% from a year earlier and 0.9% from January. It was the third month in a row that sales fell from the previous year.
“Buyers and sellers are at a standoff,” said G.U. Krueger, an economist with IHP Capital Partners, an Irvine-based real estate investment firm. “Buyers want to pay less and sellers don’t want to sell for less.”
The result, he said, is that fewer deals are getting done.
The phenomenon has been in play for several months now, helping to create a calming of the market.
For the third month in a row, the Southern California median -- the price at which half of homes sold for less and half for more -- rose about 13% year over year after several months of slightly larger gains.
“You just can’t call this a downturn,” said John Karevoll, chief analyst for La Jolla-based DataQuick. “The sense of urgency that permeated the market has receded. But there’s nothing to indicate that we’re in for something more ominous.”
One thing is clear: The time needed to sell off the current inventory is increasing, said Patrick Veling, president of Real Data Strategies in Brea.
He said it would take about 19 weeks to sell all the homes on the market in Los Angeles and Orange counties today, assuming a sales pace seasonally adjusted over the last 12 months. That’s up from 12 weeks a year earlier.
By comparison, during the depths of the last real estate downturn, in the 1990s, local inventories swelled to 19 months of supply.
Veling, who analyzes listings data, said demand appeared soft these days because sellers outnumbered potential buyers. But that could change if sellers find they can’t command the prices they want.
“There are many sellers who don’t need to sell but are testing the market,” he said.
“This is why some are calling this the end of the market,” Veling said. “But we went through this last year too as buyers backed off, thinking sellers would lower their price. Instead, sellers took their homes off the market.”
New homes remained in high demand in February as sales rose 19% from a year earlier, with every Southland county except San Diego posting an increase.
But new-home prices declined in Los Angeles and Orange counties, falling 5.4% and 21.5%, respectively. That would suggest that the hottest-selling homes are condominiums and condo-conversion units, which typically are priced lower than most single-family homes, Karevoll of DataQuick said.
The overall slowdown in sales comes as interest rates have started to tick up. Last week, the average 30-year fixed-rate mortgage rose to 6.37% nationally, the highest rate in more than two years. Five-year hybrid adjustable-rate mortgages, which are tied to short-term Treasury rates, averaged 6.03% last week, up from 5.22% a year earlier.
A sharp rise in interest rates would send the region’s housing market into “a significant lull,” Karevoll said.
So far, though, mortgage lenders have been devising ever more creative loans to extend borrowers’ ability to finance home purchases. On Tuesday, the California Housing Finance Agency, a quasi-governmental organization that provides financing to first-time home buyers, introduced a 40-year fixed-rate mortgage.
In Los Angeles, Orange, Ventura, Riverside, San Bernardino and San Diego counties, the median home price bounced back from January’s results or held steady, said DataQuick, which analyzes all closed property transactions in a given period. At $469,000, January’s median was the lowest since July.
Analysts were reluctant to draw too many conclusions from January’s and February’s results, saying that by the end of this month a more accurate picture should become apparent.
By then, the market will be entering the spring selling season -- the strongest period in the annual housing cycle. Last year at this time, shrinking inventory and lower interest rates created a “mini-frenzy” of buying activity, economist Krueger said.
“The question now,” he said, “is what will happen this time.”
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Mixed picture
Median price and number of new and existing homes sold in February, by county and overall in Southern California
*--* % change Median % change Number of from price from Area homes sold year ago (thousands) year ago San Bernardino 2,877 -5.4% $373 +27.7% Ventura 804 -8.8 618 +18.6 Los Angeles 6,405 -9.2 490 +15.6 Orange 2,672 -7.5 617 +11.2 Riverside 4,282 +4.8 410 +10.2 San Diego 2,865 -16.8 502 +6.4 Southern California 19,905 -7.0 480 +12.9
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Source: DataQuick Information Systems
