Region’s home prices hold firm
The Southern California housing market may be entering a period of stability after months of plunging home sales and slowing price appreciation, data released Tuesday suggested.
Home prices in the region in October were unchanged from September, according to La Jolla-based research firm DataQuick Information Systems. Although at their lowest level for an October in a decade, sales nonetheless showed the smallest rate of decline in four months.
“It appears that we’re settling down to a steady state,” said G.U. Krueger, an economist at real estate advisory firm IHP Capital Partners in Irvine. “The steady state will mean different things to different people, but it will be fine for most Californians who have owned their homes for a while.”
Such a stable market could be reminiscent of much of the 1990s, when prices showed small or no gains after booming by double-digit levels during the late 1980s and falling during the early 1990s. Although no one knows whether the current slowdown will follow a similar pattern, many analysts don’t anticipate a market crash as long as Southern California’s economy continues to expand.
“I think it’s the beginning of a long-term, stable market,” said John Karevoll, DataQuick’s chief analyst.
The flattening market also could suggest a standoff between buyers and sellers. Sellers appear to be unwilling to lower their prices much further, leaving buyers in a position of either taking it or leaving it. In many cases, they are leaving it -- explaining the slower pace of sales.
The median price of all types of homes sold in October was $484,000, the same as in September and 2.3% higher than a year earlier, DataQuick reported. Sales in the six-county region dropped 22.4% to 22,117 from a year earlier, the smallest rate of decline since July.
The region’s housing market has been unwinding for the last 12 months after a dramatic run-up in which prices doubled in less than five years and routinely posted double-digit year-over-year gains during 2004-05. Year-over-year increases have been in the single digits for seven months.
That rate of appreciation is likely to keep on slowing, and could turn negative at the end of this year or early next year, Karevoll said. But that would be normal in a market trying to reach an equilibrium after such hefty gains in recent years, he said.
Year-over-year price declines have persisted for several months in San Diego County. In October, the county’s median price fell 5.5% to $485,000 from a year earlier.
But that was up nearly 2% from September, the first monthly increase since March -- an encouraging sign for a market that was Southern California’s hottest during the peak of the boom in 2004-05.
Another indication of stability is a drop in the inventory of homes for sale. Sellers reluctant to lower their prices are increasingly choosing to take down their “for sale” signs.
“Every day I see a number of owners pulling their homes off the market,” said Steven Thomas, president of Re/Max Real Estate Services of Orange County. According to his calculations, there were 14,000 listings in Orange County as of last week, versus 16,000 on Aug. 24.
Although the final quarter of the year is always the slowest for sales, Thomas said he expected “an avalanche” of homes to come off the market between now and the end of the year, coupled with further softening of demand during the holiday season.
Orange County continued to boast the region’s highest median price at $625,000 in October, unchanged from September but up 3.1% from a year earlier. Sales declined 24.9% to 2,715.
The Inland Empire counties of Riverside and San Bernardino, where prices were still rising by double digits as recently as this spring, also slowed in October.
Riverside County’s median was $410,000, up 4.9% from a year earlier but off its record of $423,000 in September. Sales fell 24.2%. San Bernardino County’s median price was $362,000, up 2.3% from a year earlier. Sales declined 21.3% year over year.
Ventura County home prices depreciated for the second month in a row to a median of $582,000, off 2.3% from October 2005. Sales fell 19.6% to 940, which represents just 4.3% of all Southland sales.
DataQuick reported Monday that Los Angeles County’s median price was $514,000 in October, up 4.5% from a year earlier, as sales dropped 21.8%.
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Sales volume and prices
Median prices and sales of homes and condominiums in Southern California counties:
*--* Median price in No. sold in % Oct. ’05 Oct. ’06 % Oct. ’05 Oct. ’06 change (thousands) change Los Angeles 9,792 7,662 -21.8% $492 $514 +4.5% Orange 3,614 2,715 -24.9 606 625 +3.1 Riverside 5,542 4,200 -24.2 391 410 +4.9 San 4,217 3,318 -21.3 354 362 +2.3 Bernardino San Diego 4,155 3,282 -21.0 513 485 -5.5 Ventura 1,169 940 -19.6 596 582 -2.3 So. 28,489 22,117 -22.4 473 484 +2.3 California
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Source: DataQuick Information Systems
