California home sales up 15% year over year; prices rise 19%
The California housing recovery boomed forward in November, with home prices reaching levels high enough to trigger questions about whether speculators are overdoing a spending spree.
The median price of all houses and condos sold in the Golden State was $291,000 last month, up 2.1% from October and 19.3% from $244,000 in November 2011, the DataQuick real-estate information firm said Thursday. The median is the point at which half the sales are for more and half for less.
The number of homes sold rose nearly 15%, to 37,481, according to the count by San Diego-based DataQuick. Sales of homes that had been foreclosed on made up 16.6% of the sales -- about half the percentage in November 2011 and the lowest level of foreclosure sales since October 2007.
Homes purchased for all cash remained at extremely high levels, mostly because of investors snapping up homes after the huge price declines of the housing bust. DataQuick analyst Andrew LePage said 32.5% of all November home sales in California were for cash, more than twice the long-term average.
The run-up in prices caught the attention of Dean Baker, co-director of the Center for Economic Policy and Research in Washington, who regarded the trend as “serious grounds for concern that these markets are being driven by speculation.”
“While some speculators buying up homes at a bottom can be positive, the sort of price rises that you are seeing there may be excessive,” Baker said in an email to The Times.
He noted that a big factor in the rising median price is increased sales of high-end homes, which skew the results to the upside. Indexes that track specific home resales, such as Case-Shiller, show far lower price appreciation.
Still, Baker said he thought the California market could experience “serious gyrations” because of the heavy purchases by investors hoping to sooner or later flip the homes at a profit.
“The speculators likely have pushed prices above where the market would put them in some markets,” he said.
Ed Leamer, director of the UCLA Anderson Forecast of the economy, had a more sanguine take on the trend than Baker.
“I am inclined to think that what he calls speculators know more about the market than he does,” Leamer said. “It’s a good thing for professionals to be putting a floor under home prices.”
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