California home prices show gains
LOS ANGELES – Southern California home prices may have finally hit bottom, with median values rising last month for the first significant increase in two years, new data show.
Along with a 6.4 percent rise in prices, fewer than half of the sales were foreclosures – the first time that has happened in nine months.
“I think we can now say with fair degree of confidence the pace of real home price declines has slowed dramatically,” said Los Angeles economist Christopher Thornberg, who was an early predictor of the housing bubble.
But Thornberg and other analysts cautioned that the housing market remained wobbly and prices would not rise substantially in many neighborhoods for months or even years. The median price of $265,000 is far below the 2007 peak of $505,000.
What’s more, California is struggling with one of the highest unemployment rates in the nation and mortgage defaults are continuing to rise. A surge in new foreclosures could squelch any potential recovery in the housing market.
Foreclosures have dominated the six-county Southland residential market for months, with most of the activity centered in distressed areas such as the Inland Empire area of Riverside and San Bernardino counties. By contrast, last month’s gain was driven by sales of higher-end homes in the six-county region, which pulled up median prices.
That presents a mixed picture. Although prices have firmed at the low end of the market, they are still falling in affluent communities, the home sales data released by MDA DataQuick on Wednesday show.
The high-end market did not suffer the rapid shock of subprime mortgage defaults and foreclosures that hammered the housing market’s lower end. Sales stagnated as wealthier sellers held out for higher prices.
Now, however, some sellers “are realizing the market’s not going to just bounce back,” and are starting to sell homes for less than they had recently hoped to get, said T.J. Culbertson, a Beverly Hills real estate broker.
That has drawn buyers to the leafy suburbs, looking for deals.
The percentage of homes that sold in June for more than $500,000 rose to about 20 percent of all homes purchased, up from 18 percent in May.
The median home sales price has been leveling off all year, hovering around $250,000 for five months before June’s 6.4 percent increase over May’s $249,000 median price.
June’s median, though, was 26 percent below June 2008, and prices remain at 2002 levels. The median is the point at which half the homes sold for more and half for less.