Home prices rise despite housing woes
Congress is talking about bailing out homeowners facing foreclosure. Lenders are filing for bankruptcy. The National Assn. of Realtors is predicting a drop in U.S. home values this year for the first time since it began keeping records 40 years ago.
Doom, any number of forecasters and bloggers will eagerly tell you, is at hand for housing.
Yet the median sales price in Southern California went up again in March, crossing the half-a-million-dollar mark, a real estate data service reported Thursday.
The median price paid for a home in Southern California last month was $505,000, up 4.6% from March 2006, according to La Jolla-based DataQuick Information Systems. The median is the point at which half the prices are higher and half are lower.
Sales volume dropped substantially, however, continuing a trend that began 18 months ago when the red-hot market first began to cool.
March sales totaled 21,856 new and resold homes in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. That was down 32.4% from March 2006, the sharpest year-over-year drop since September. It was the slowest March in a decade.
The falling sales numbers reflect the fact that some owners, now that their equity is rising only modestly, are declining to move up.
Entry-level buyers, meanwhile, are being squeezed out of the market. DataQuick noted that financing with adjustable-rate mortgages had fallen sharply. These loans, many with low introductory teaser rates, have become harder to get as lenders toughen their standards or go out of business because of rising defaults and foreclosures.
There were also fewer sales to people who don’t plan to live in the homes they buy, pointing to a decline in speculative house flipping.
Slow sales usually create downward pricing pressure. One reason they haven’t, DataQuick President Marshall Prentice speculated, is because the 2003-to-2004 boom essentially “borrowed” from future purchases as people stampeded into the market. Current demand, in other words, was “pre-met.”
The rise in the region’s median price, though anemic by the double-digit standards of the boom, was more robust than last fall’s increases.
If nothing else, the long-awaited downturn seems a little tardy -- at least in most of Southern California.
“The perception out there is that we’re at the edge of a volcano and about to fall in, but the numbers don’t indicate that’s happening,” DataQuick analyst John Karevoll said.
This is the second time the median price in Southern California has been reported as going above $500,000. The first time was March 2006, but DataQuick later revised that lower when it changed its methodology from a weighted median to a pure median.
Orange County, which has the highest home values in the region, saw prices appreciate 0.6%. Sales volume declined 25.5%.
In Riverside and San Bernardino counties, traditionally a low-price haven, sales dropped nearly 50% from the torrid pace of March 2006. But even there, median prices edged up, 0.2% and 1.1%, respectively.
San Diego County, where home prices peaked earlier than the rest of the region, continued to decline. Its median fell 4.9%.
Housing pessimists say that’s a harbinger of a decline for the entire region.
“This data notwithstanding, the Southern California housing correction is in full swing and will likely continue at least through this time next year,” said Mark Zandi, chief economist for research firm Economy.com.
Karevoll isn’t so sure, saying the decline in sales was to be expected after the boom. The fact that prices are rising, he said, may be a more telling indicator.
Los Angeles County, which makes up more than a third of the Southern California market, appears to be gaining strength. Sales volume dropped the least here, by 22.7%, while the median went up the most, by 6.3%. The median price in the county is now $540,000.
“No one expected L.A. to be doing this well,” the analyst said.
Brokers confirmed that view.
“Last fall there was a bit of a lull, and people were beginning to see cracks,” said Cecelia Waeschle of Coldwell Banker in Beverly Hills. “But January took off like gangbusters.”
On the Westside, 228 houses sold for more than $3 million in the first quarter, according to Waeschle’s data. That was almost identical to the 230 houses in the first quarter of 2006. For houses offered for more than $20 million, the market is even hotter.
“People have so much money, there’s so many more billionaires,” she said. “Across the board, there’s no inventory. If you have a ‘done’ house"-- one that has been updated and upgraded -- “it will fly out the door.”
In the less expensive South Bay, the year began ominously, with too much inventory and too few buyers, said Michael Collins, general manager of Shorewood Realtors in Manhattan Beach.
Eventually, the buyers blinked. Shorewood agents represented buyers or sellers on 207 properties that went into escrow in March, up from 190 in the same month last year. The value of the sales totaled $229 million, up from $203 million.
“We’re getting multiple offers, like the good old days,” Collins said.
In the Inland Empire, things aren’t looking so good. Gretchen Barrantes, a Moreno Valley agent, did eight deals in the first quarter of 2006. This year she’s done 14. But all were either foreclosures or short sales in which the sale price was less than the outstanding mortgage. People don’t want to compete with foreclosure prices, she said, so they keep their homes off the market.
“I haven’t had a regular sale in a long time,” she said.
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Median price and number of new and previously owned homes sold
*--* Median % change % change price from No. of from County (thousands) year ago homes sold year ago Los Angeles $540 +6.3% 8,353 -22.7% San Bernardino 369 +1.1 2,476 -46.6 Orange 629 +0.6 3,130 -25.5 Riverside 420 +0.2 3,680 -47.3 San Diego 490 -4.9 3,218 -26.3 Ventura 567 -6.9 999 -24.7 Total 505 +4.6 21,856 -32.4
Source: DataQuick Information Systems