Slow sales, record median for Southland homes
April 12, 2007
La Jolla,CA----Southern California’s housing market continued to send contradicting messages in March. Sales remained at a ten-year low while the median sales price increased to a new peak. The rise in median is in part due to a drop-off in sales of entry-level homes, a real estate information service reported.
A total of 21,856 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 23.6 percent from 17,680 for the month before, and down 32.4 percent from 32,320 for March last year, according to DataQuick Information Systems.
Last month’s sales were the lowest for any March since 1997 when 20,024 homes were sold. The slowest March in DataQuick’s statistics, which go back to 1988, was in 1993 when 16,214 homes were sold, while the strongest was in 2004 when 37,030 were sold. The March average is 26,033. Last month’s sales drop was steepest in San Bernardino and Riverside counties. “There are several things going on here. First, 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. We actually thought this would happen four or five months ago. Second, both lenders and buyers are being more cautious, the dicey mortgage financing has all but disappeared,” said Marshall Prentice, DataQuick president.
“Third, it’s becoming apparent that a lot of the 2004/2005 buying activity was drawing from the future, and that future is now. A lot of demand was pre-met, otherwise these low sales counts would have put more downward pressure on prices by now,” Prentice said.
The median price paid for a Southland home was $505,000 in March, a new record and the first time it was above $500,000. The $505,000 was up 2.0 percent from $495,000 in February, and up 4.6 percent from $483,000 for March last year. The uptick in median is also due to a stronger-than-anticipated market in Los Angeles County. The other Southland counties have flat or declining prices. Prices in San Diego County have been flat the past half year, about five percent below their peak when adjusted for seasonality and shifts in market mix.
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 $2,326 last month, 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. They are 4.5 percent below the current cycle’s peak last June. Indicators of market distress are moving in different directions. Financing with adjustable-rate mortgages is declining significantly. Foreclosure activity is rising but is still within the normal range. Down payment sizes are stable and flipping rates and non-owner occupied buying activity is down, DataQuick reported.