Southland home prices, sales continue to climb in February
Southern California experienced continued strong growth in home prices and sales last month as buyers shifted toward ritzier abodes in coastal markets.
The median price in the six-county Southland rose nearly 21% from February 2012, real estate information provider DataQuick said Wednesday.
A total of 15,945 homes and condos sold in February — the highest volume for the month in six years. The percentage of absentee buyers, those buying investment or vacation properties, hit a record high of 31.4%.
Buyers also purchased more high-priced homes in the Southland’s coastal markets, while fewer homes sold in lower-cost Riverside and San Bernardino counties that have become havens for investors.
Bargains are getting hard to find.
“The low-hanging fruit has been picked in the Inland Empire,” said Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate.
Buyers in Southern California paid a median of $320,000 last month, marking the 11th straight month of year-over-year increases. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling as well as a general change in values.
“Most every gauge shows prices are up significantly over the past year, even after adjusting for changes in the types of homes selling,” DataQuick President John Walsh said in a statement.
But median prices remained well off their peak of $505,000 in 2007 and were the same as they were in 2003, Walsh noted.
Although values are rising, a large portion of the gains can be chalked up to a decline in low-priced sales, such as foreclosures, and increases in higher-end sales, said Christopher Thornberg, founding partner at Beacon Economics.
“I don’t think these double-digit numbers are legit,” he said.
Buyers are also driving up prices by outbidding one another.
“Everybody is trying to buy. They are trying to beat out higher interest rates,” Thornberg said. “All these people should have been buying a few years ago.”
Median prices remained essentially flat compared with January. The real test of the recovery will come as the spring home-selling season begins in earnest.
“March and April will offer a better view of how broader market trends are shaping up this year,” Walsh said. “One of the real wild cards will be how many more homes go up for sale. More people who’ve long been thinking of selling will be tempted to list their homes at today’s higher prices.”
Tight supply has played a major role in rising prices. But as prices increase, more homeowners can escape their negative equity positions, enabling them to sell their homes and potentially loosening supply. Walsh said that “should at least tame” rising values.
In February, more sales of upscale homes also helped drive median prices higher. The number of move-up homes sold at prices from $300,000 to $800,000 jumped 33.4% year-over-year. The volume of homes that sold for more than $800,000 rose 62.7% compared with February 2012.
Nick Segal, president of high-end brokerage Partners Trust, said a recovering market and higher prices have unleashed pent-up demand for higher-end homes. As prices rise, sellers can unload homes without taking a loss, and buyers worry that they need to buy before prices rise further, he said.
Buyers paying with cash purchased a near-record 35.6% of homes sold, many of them in higher-end communities. “I am seeing all cash buyers in the Hollywood Hills, Hancock Park and all around town,” said Max Nelson, a senior partner at Deasy/Penner & Partners’ Beverly Hills office. “They are mostly international businesspeople.”
Those needing a mortgage to buy upscale homes are also faring well, as the interest rates on jumbo mortgages have fallen dramatically since the financial crisis. Jumbos, defined as mortgages for more than $625,500 in high-cost areas such as coastal California, carried interest rates more than two percentage points higher than smaller loans in 2010 — a gap that has narrowed to less than half a percentage point.
Sales of lower-end homes, meanwhile, are on the decline. The number of homes that sold for under $200,000 in February dropped 26.7% compared with a year earlier. That’s because of tightened inventory, with fewer foreclosures on the market and many would-be sellers still owing more on their homes than they are worth, according to DataQuick.
All six counties — Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura — saw significant price increases.
Orange County saw the most dramatic price gains as the county’s median sales price rose 22.3% to $477,000. In Los Angeles County, the median sales price rose 17.1% — a sizable jump, but the smallest of the region. Buyers there shelled out a median of $350,000.
Times staff writer E. Scott Reckard contributed to this report.