Southern California home prices continue slide in May
Southern California’s housing market weakened in May, with prices and sales dropping in all of the region’s counties, providing further evidence of a sluggish spring shopping season.
The region’s median home price fell 8.2% from the same month last year to $280,000 and was unchanged from April, according to DataQuick in San Diego. It was the largest amount the median has fallen year-over-year in 20 months and represented the 11th consecutive decline.
Sales fell 17.4% from May 2010, with a total of 18,394 newly built and previously owned homes sold in the region last month. That sales tally was a three-year low for the month. Sales were essentially flat from April to May, up 0.3%.
Lingering economic uncertainties have left the market soft since the expiration of tax credits for home buyers, which fueled the market last year. Some economists also have said bank lending remains tight.
“People are gloomy,” said Richard Green, director of USC’s Lusk Center for Real Estate. “But if you look at our job numbers over the last year, we are not doing bad.”
The difficulty of getting a mortgage is a big part of the problem, Green said.
“Hollywood is hiring, Silicon Valley is hiring. I think things are getting better in California,” Green said. “I think housing is about as much about the availability of credit as anything else.”
Spring tends to be a key time for the housing market, as many families prepare to move during the summer school recess. This spring has shaped up to be the weakest in three years. The May sales tally was 29% below the average for the month with only three other years in DataQuick’s history being lower: 2008, 1995 and 1993.
Sales of newly built homes hit their lowest level for a May since at least 1988. Builders are struggling to compete against previously owned homes, as foreclosures have flooded the housing market since the start of the subprime mortgage meltdown.
The overall decline in home sales from May 2010 was particularly pronounced because the year-earlier figures reflected enthusiasm for the popular home buyer tax credit, which was nearing expiration.
Buyers were rushing to close sales to meet a deadline to qualify for the federal tax credits, which coincided with a state tax credit that also boosted sales. Economists and analysts who follow the housing market see that stimulus as having pulled sales that would have otherwise occurred in 2011 into 2010.
The median price is also heading toward its previous low. The region’s median stands 13.4% above its recent bottom of $247,000 in April 2009, during some of the worst months of the financial crisis. The median is the point at which half the homes in the region sold for more and half for less.
So-called distressed properties continue to account for more than half of the region’s market for previously owned homes.
Foreclosures made up 33.4% of the resale market last month, down from 33.8% in April and 33.9% from a year earlier. Short sales, in which a bank allows a home to be sold for less than what is owed, made up 18% of the market last month, DataQuick estimated, up from 17.1% in April and down from 20.1% in May 2010.