July 19, 2012
By ELLIOT SPAGAT
Southern California extended its housing recovery in June as the median sales price matched a two-year high and buyers drawn by low interest rates snapped up homes in pricier coastal regions.
The median price of new and existing houses and condominiums in the six-county region reached $300,000 in June, up 5.3 percent from $285,000 during the same period last year, research firm DataQuick said recently.
It marked the third straight month that prices increased from last year, matching the longest streak since late 2010.
Meanwhile, the California Association of Realtors said the statewide median sales price in June for existing single-family homes grew 8.1 percent to $320,540 from $296,410 a year earlier.
That number doesn’t include condominiums or new homes, and it relies on residential brokers instead of county property records. Still, it suggests the recovery extended to the entire state last month as buyers were lured by low interest rates.
“Just about everywhere in the state has hit bottom,” said Jeffrey Michael, director of the University of the Pacific’s Business Forecasting Center in Stockton. “Some areas have moved into recovery and others are sliding along the bottom. It looks like the coastal areas are moving into recovery.”
Richard Green, director of the University of Southern California’s Lusk Center for Real Estate, believes California’s housing market hit bottom at the end of last year or early this year. He said metrics such as the relationship of housing prices to rental costs and income suggest the timing is ripe to buy a home.
“The fundamentals for owning are the best they’ve been in a while,” he said. “You probably have to go back to 1997. Owning just looks really good now.”
However, many buyers are facing slim pickings.
The California Association of Realtors said its statewide index showed unsold inventory in June covering only 3½ months, down from 5.1 months a year earlier.
The figure represents how long it would take to sell all existing single-family homes at the current sales clip. Supply in a normal market is considered to be six to seven months.
DataQuick President John Walsh cautioned against reading too much into the median price, saying the gain reflects a shift in sales from foreclosed properties in economically battered regions to higher-priced neighborhoods along the coast. Foreclosed properties tend to sell at steep discounts.
“The June numbers look pretty good at first glance, but they’re more mixed when you scratch beneath the surface,” he said. “Yes, the median sales price rose again. But it’s clear this has a lot to do with the changes in the types of homes selling, rather than across-the board price appreciation.”
Distressed sales, which include foreclosures, accounted for 42.2 percent of existing home sales in Southern California last month, the lowest since February 2008, DataQuick said.
Homes that were foreclosed upon during the previous year accounted for 24.5 percent of existing home sales, down from 32.9 percent during the year-ago period.
Short sales — when the sales price is below the amount owed on the property — made up 17.7 percent of existing home sales, down from 17.9 percent last year.
The number of homes sold in Southern California reached 22,075 in June, up 7.5 percent from 20,532 a year earlier, DataQuick said. It was the sixth straight month of annual gains, the longest streak since late 2009 and early 2010.
County breakdowns showed how coastal areas were driving overall gains. Orange, the most expensive in Southern California, posted a 13.7 annual increase in the number of homes sold, with a median price of $453,000. San Bernardino, the least expensive in the region, showed a 1.3 percent annual decline in sales, with a median price of $158,000.
Reflecting the shift to pricier deals, sales of homes for at least $500,000 accounted for 22.5 percent of Southern California home sales last month, the highest since August 2008, when the figure stood at 23.6 percent. Homes that went for at least a half-million dollars made up only 13.8 percent of total sales in January 2009.
The June median price in Southern California was up 21.5 percent from $247,000 in April 2009 but was still more than 40 percent off its peak of $505,000 in the middle of 2007.
Economists said a spike in unemployment or foreclosures were among the biggest threats to the nascent recovery. Michael said the low inventory suggests the market would be able to absorb a new raft of foreclosures.
Leslie Appleton-Young, chief economist at the California Association of Realtors, said the state recovery began in the Central Valley about three years ago with investors snapping up homes in tranches and often paying cash. This year, the recovery has shifted to the “upper reaches of coastal areas,” where homeowners have been reluctant to sell, she said.
“They’re not feeling as frozen with uncertainty,” she said.