Real estate prices reach another record
April 16th, 2007 - Category: Real EstateSouthern California’s residential real estate market continued its wayward course in March with the median price reaching another record while sales declined to a 10-year low for that month, a market tracker said this week.
Last month the median price of a home in the six-county region rose an annual 4.6 percent to $505,000, said La Jolla-based DataQuick Information Systems. It’s the first time the median price moved above $500,000, and it was a $10,000 gain from the prior record of $495,000 in February.
DataQuick’s report includes new and previously owned houses and condominiums.
The rise in the median is in part because of a drop-off in sales of entry-level homes, the company said. The median fell in two markets, Ventura and San Diego counties.
Meanwhile, sales plunged an annual 32.4 percent to 21,856 transactions across Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. Sales did increase 23.6 percent from February.
The slowest March in DataQuick’s statistics, which go back to 1988, came in 1993 with 16,214 homes sold and the strongest was in 2004 with 37,030 sales.
The March average is 26,033 sales.
“The drop-off in entry-level sales is part of a normal real estate cycle. That category surged at a later point in time, and is declining at a later point in time,” Marshall Prentice, DataQuick’s president, said in a statement.
The company thought this would happen four or five months ago.
Also, home loan standards have tightened and the exotic financing options are not being used very much.
DataQuick also doesn’t believe that the subprime meltdown will roil Southern California’s market.
“Perception has outstripped reality on that,” said DataQuick analyst John Karevoll. “The loans at risk are a subcategory of a subcategory and a small percentage of those are going to go into default. It’s a problem, but not as big an issue as it’s made out to be.”
The report also showed that:
In Los Angeles County, the median price increased an annual 6.3 percent to a record $540,000, while sales fell 22.7 percent to 8,353 transactions.
In Orange County the median gained 0.6 percent to $629,000, and sales fell 25.5 percent 3,130 transactions.
Another factor in the sales slide is that easy credit and exotic loan products drew people into the market over the last two years who normally would be shopping now, DataQuick said.
That explains why declining sales are not putting more downward pressure on prices.
“You need more downward pressure on prices to push them down than you need upward pressure to push them up,” Karevoll said.
In March, Southern California buyers took on a monthly mortgage payment that averaged $2,326, up from $2,303 the previous month and up from $2,297 a year ago.
Adjusted for inflation, current payments are 8.9 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle. And they are 4.5 percent below the current cycle’s peak last June.
Indicators of market distress are also moving in different directions.
Financing with adjustable-
rate mortgages is declining significantly while foreclosure activity is rising but is still within the normal range.
Down-payment sizes are stable and flipping rates and nonowner occupied buying activity is down, DataQuick reported.
“The market has been adjusting ever since interest rates started creeping up and it got expensive for people to borrow,” said Eduardo Martinez, an economist at the Los Angeles County Economic Development Corp.
Information from: www.presstelegram.com
