Relative strength in California housing
Thanks partly to its healthy economy and lack of overbuilding, California’s home prices are holding up slightly better than other recently red-hot locales, according to data released Monday.
The nation’s housing slump spread in the third quarter, as prices for resale homes in such places as Phoenix and Florida’s eastern coast declined compared with a year earlier, the National Assn. of Realtors said.
Yet most of California’s biggest real estate markets, including Los Angeles, the Inland Empire and the San Francisco Bay Area, continued to book year-over-year gains, albeit at a much slower pace, according to the Realtors group.
Among the reasons for California’s better performance: Lack of available land and regulatory restrictions have led to a smaller supply of new or under-construction homes competing with resale homes. New homes represent about 15% of the total state housing market.
Also, the California economy is healthy and most people “are keeping up with their mortgage payments,” said Leslie Appleton-Young, chief economist for the California Assn. of Realtors, which supplied data for the national Realtors’ report.
“The data on the economy is fairly good and we’re seeing job growth,” which helps bolster demand for housing, she said.
California is a step ahead of other parts of the nation because it was the first region to start experiencing double-digit price gains in 2000 and the first to start tapering off. Price increases have been slowing for more than a year, as have sales.
Now, other locales are following with their own slowdowns, said John Karevoll, chief analyst with La Jolla-based research firm DataQuick Information Systems.
Nationwide, the median price of a resale home fell 1.2% to a seasonally adjusted $224,900 in the July-September period, with about a third of the 148 U.S. markets surveyed posting year-over-year declines, the Realtors said. The median is the price at which half of all homes sold for more, half for less.
In California, three of seven markets depreciated: San Diego, where the median price declined 2.1% to $601,900; Sacramento, which saw prices drop 3.5% to $375,400, and Orange County, where the median dipped 0.8% to $705,000.
San Diego and Sacramento also happen to be among the state’s biggest new-home markets. Builders in these areas have been readily discounting their prices, putting pressure on existing-home values.
Overall, Appleton-Young said, the national data “reflect the fact that as you get into fall, there is less upward pressure on prices and less activity in general.”
“But we are still seeing firmer prices here,” she added.
Sales also haven’t fallen as much in California as in some other once-hot markets.
Sales of resale homes here fell 28% in the third quarter versus a year earlier, the Realtors said. By comparison, Arizona sales plunged 36%, Florida’s dropped 34% and Nevada’s declined 38%. Nationwide, sales are down 12.7% year over year.
One ingredient helping buoy California’s real estate market is the relative strength of the $2-million-and-above home market. In the third quarter, luxury home values in California gained at least 4% from a year earlier, according to a survey by San Francisco-based First Republic Bank.
“I’m a little surprised by how well it’s holding up,” First Republic Chief Operating Officer Katherine August-deWilde said.
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Hot and cold markets
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Year-over-year home price changes
*--* Third quarter Metropolitan area 2006 Seattle 14.6% Riverside-San Bernardino- Ontario 5.9 Houston 5.3 Los Angeles-Long Beach- Santa Ana* 5.2 San Francisco 3.8 New York-Long Island 3.6 Atlanta 2.9 Dallas 2.8 Chicago 1.7 Las Vegas 1.6 San Jose 0.0 Denver --0.1 Phoenix --0.6 Orange County* --0.8 San Diego --2.1 Washington, D.C. --2.2 Sacramento --3.5 Boston --4.3 Miami --5.6
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*Orange County is also counted as part of the Los Angeles metropolitan area.
Sources: National Assn. of Realtors, California Assn. ofRealtors
