Southland home prices set record, appreciation/sales weaken
July 18, 2006
La Jolla,CA----Southern California home prices climbed to a new peak last month but at the slowest pace in more than six years. Prices edged higher even as June sales fell to a seven- year low, the result of higher borrowing costs, more inventory and less urgency among buyers.
The median price paid for a home in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties was a record $493,000 last month. That was up 1.6 percent from May, and up 6.0 percent from $465,000 in June last year, according to DataQuick Information Systems.
Last month's 6.0 percent annual increase in the median was the smallest since May 2000, when the $203,000 median rose 5.7 percent from $192,000 a year earlier. Recent trends suggest the median could set more records this summer but likely at an even slower rate of appreciation.
"Many view this as a great conundrum: Prices continue to rise, even set records, as sales continue to slow. It happened for two years in San Diego before prices last month finally fell slightly below year-ago levels. We view this as the normal winding down of a real estate cycle, where declining demand gradually erodes price growth until it halts or reverses. We expect more markets to see prices flatten or decline a bit in the second half of this year," said Marshall Prentice, DataQuick president.
A total of 29,237 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 7.2 percent from 27,286 sales the month before but down 17.5 percent from 35,454 in June last year. Sales have declined for seven consecutive months on a year-over-year basis.
Last month's 29,237 sales were the lowest for a June since 1999, when 29,076 homes sold, but still surpassed the June average of 26,608 going back to 1988. The strongest June was in 2005, when 35,454 homes sold, while the weakest was in 1992, with 16,335 sales.
DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $2,437 last month, up from $2,376 for the previous month, and up from $2,021 for June a year ago. Adjusted for inflation, current payments are about 8.4 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle.
Indicators of market distress are still largely absent. Financing with adjustable-rate mortgages has trended lower over the past year. Foreclosure activity is rising but remains low in a historical context. Down payment sizes are stable, as are flipping rates and non-owner occupied buying activity, DataQuick reported.
All Homes No Sold No Sold Pct. Median Median Pct.
Jun-05 Jun-06 Chg Jun-05 Jun-06 Chg
Los Angeles 12,001 10,248 -14.6% $475K $517K 8.8%
Orange County 4,898 3,608 -26.3% $603K $646K 7.1%
San Diego 5,663 4,301 -24.1% $493K $488K -1.0%
Riverside 6,485 5,927 -8.6% $393K $422K 7.4%
San Bernardino 4,700 3,998 -14.9% $322K $367K 14.0%
Ventura 1,707 1,155 -32.3% $584K $627K 7.4%
So. California 35,454 29,237 -17.5% $465K $493K 6.0%
Source: DQNews.com
Media Inquiries: John Karevoll (909) 867-9534
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