Few bright spots in Southern California housing market
Southern California’s housing market turned chilly in December, with prices falling in most counties and the region’s median price barely improving over last year.
The median price paid for a home in the region was $290,000, up 1% from November and 0.3% from December 2009, according to data released Tuesday by San Diego research firm MDA DataQuick.
It was the smallest year-over-year gain in the median — the point at which half of homes sold for more and half for less — in the Southland since December 2009.
“Southern California is starting to show some of the weakness that the state as a whole has been showing,” said Jacquelynne Chimera, an analyst for investment bank Keefe, Bruyette & Woods.
“Given the fact that higher-priced homes are more prevalent in the market — we are seeing more sales in that category of homes — you would expect the median to go up,” she said. “Home prices were basically flat. And so what that means is that on a home-by-home basis, prices must be declining.”
The median sale price on a year-over-year basis was down in the counties of Los Angeles (2.7%), Orange (5.7%), San Bernardino (1.3%) and Ventura (1.4%). The median in San Diego and Riverside counties was up 0.9% and 2%, respectively.
Regional economists said the housing market won’t get moving again until the job picture brightens. California’s financial problems are a major concern hanging over any improvement.
“I don’t think you are going to see any immediate, strong surges,” said Kerry D. Vandell, director of UC Irvine’s Center for Real Estate. “A lot of folks are concerned about the state situation, the budgetary issues and what are the implications for job cuts, and how that will affect various communities.”
Jerry Nickelsburg, senior economist for the UCLA Anderson Forecast, said he expected a weak spring sales season because the economy would not have improved enough to have created jobs by then.
“We are not seeing substantial job growth happening until at least later in 2011,” Nickelsburg said. “We should see a little bit of price depreciation in the housing markets. This market has a little bit more to work through with its inventory while we are awaiting employment increases.”
Some real estate agents were optimistic, however, that rising mortgage rates could push some hesitant buyers into the market.
“Buyers have an understanding that this really might be the time to step up because a half-point more [in a loan’s interest rate] costs you so much more,” said Betty Graham, president of Coldwell Banker Residential Brokerage of Greater Los Angeles. “So if they had been on the sidelines, and they can step up, I think that is happening.”
Historically low mortgage rates and low prices gave the Southland a sales boost in December over November, with sales rising 20.5% — though a sales gain is typical from November to December as home shoppers close deals for the year. Sales were down 12.5% compared with December 2009. A total of 19,528 new and previously owned houses and condominiums sold.
New home sales hit a record low for a December at 1,528, capping off the worst year for new home sales since DataQuick began keeping records in 1988.
“Looking back at 2010, it’s hard to ignore the ongoing slump in the Southland’s new-home market,” DataQuick President John Walsh said. “What happens next will hinge largely on the pace of the economic recovery and the manner in which lenders manage their inventories of distressed properties, which are competition for new homes.”
Sales of foreclosures accounted for 34.3% of the resale market last month, down from 35.2% in November and 39.6% in December 2009. Foreclosure resales peaked in February 2009, accounting for 56.7% of the market.
The key to a lasting recovery is buyers who are moving up to more expensive homes, economists said. Homes that sold for $500,000 or more accounted for 21.1% of all sales in the region last month, the same as the month prior but up from 20.7% in December 2009. Daniel Penrod, senior industry analyst with the California Credit Union League, saw that as an encouraging sign.
“We need the move-up home buyer,” Penrod said. “We saw a boost in the low end really moving the market, and now we are seeing the middle tier starting to gain some traction, and that is the tier that adds stability to the market.”
Separately, the National Assn. of Home Builders said its monthly reading of builders’ sentiment was unchanged in January at 16. The index has been stuck at that level since November. A reading below 50 shows negative sentiment about home sales.
