Southern California home prices rise 8.6%
Home sale prices in Southern California showed fresh strength in January, bouncing 8.6% from the same month one year earlier -- a period when the market was inundated with steeply discounted bank-owned properties.
But compared with a particularly strong December, the median fell 6.1% to $271,500 in January, ending eight consecutive months of price appreciation or stability in the Southland, MDA DataQuick, a San Diego real estate research firm, said Tuesday.
The month-to-month decline was attributable in part to the higher percentage of cheaper Inland Empire homes that sold in January compared with December as buyers in pricier locales stopped searching during the holidays and investors and first-time buyers made up a larger share of shoppers.
“The [January] numbers reflect, for the most part, people who would be out shopping in the middle of the holidays anywhere from late November to early January,” DataQuick analyst Andrew LePage said. “So it doesn’t surprise me that the concentration shifts a little bit back toward investors and first-time buyers, who probably feel the most urgency to snag what they consider a deal. A lot of other potential buyers would have been focused on other things during the holidays.”
Results from the first two months of the year don’t typically provide an indication of how the rest of the year will shape up, LePage cautioned.
But the mixed results come as Washington policymakers and experts intensely debate the future of the nation’s housing market. Many experts fear the market will suffer after the government ends a slew of policies intended to prop it up.
The Federal Reserve, for instance, plans next month to end a $1.25-trillion program that has helped keep interest rates at rock-bottom levels by purchasing mortgage bonds from Fannie Mae and Freddie Mac.
The Federal Housing Administration, which has backed mortgages for many first-time buyers, is expected to tighten its lending criteria later this year. And an extended federal tax credit of up to $8,000 for first-time home buyers and up to $6,500 for some current homeowners expires April 30.
Some analysts expect the market to get another boost as the tax incentive expiration nears. But as the federal measures unwind, the housing market will be weighed down by high joblessness and foreclosures.
“Beyond the spring, everything will depend on what is going to happen with those delinquencies. Are they going to turn into foreclosures or notices of default? And what are the banks going to do with them once they have them?” said Gerd-Ulf Krueger, principal economist at Housingecon.com. “There will be very significant pressure on the banks to behave reasonably . . . and then it is anybody’s guess what happens after the midterm election.”
Many real estate agents and experts are anticipating an early spring shopping season, given the tax credit and low interest rates, but say a lack of new foreclosures has slowed the sales pace. A total of 15,361 homes sold in Southern California in January, an increase of only 0.9% over the same month a year earlier when the market for lower-end, bank-owned properties began to take off, DataQuick said.
“We have more buyers than we have inventory,” Lakewood Realtor David Emerson said. “Everything has been skewed partly by the tax credit, so it is an abnormal year, and I think it will still continue to be.”
Sales dropped 31.2% in January compared with December. A decline between those two months is normal; on average, sales have fallen 28.4% in that period every year since DataQuick statistics began.
The number of foreclosures as a percentage of the resale market ticked up slightly in January. Foreclosure resales made up 42.1% of all sales of previously owned homes in Southern California, up from 39.6% in December but down from 56.4% in January 2009.