SoCal Home Sales Fall Again as Prices Continue to Rise
Los Angeles Times -- March 14, 2007
By Annette Haddad, Times Staff Writer
Southern California's housing market continued its gradual slowdown last month as sales fell to a decade low even as prices edged up to a new record, data released today showed.
In February, the median price for all types of homes sold in the six-county region reached $495,000, up 2.1% from January and up 5.3% from a year ago, according to La Jolla-based research firm DataQuick Information Systems. It was the biggest gain in appreciation since July but far from the 12% increase of February 2006.
"February's record Southland median is another indication the housing market, although certainly weaker than last year, is hardly down for the count, as some would suggest," said Marshall Prentice, DataQuick president.
Price growth has been waning for more than a year as sales have been declining. That trend continued in February. Last month, only 17,680 home sales were recorded, which was a 19.8% drop from a year ago and was the fewest for any February since 1997, according to DataQuick.
Yet, February's uptick in prices was somewhat misleading. The region's overall median was propped up by two counties that are still seeing price increases, albeit small ones — Los Angeles, which is the nation's biggest housing market, and San Bernardino, one of the most affordable. The others -- San Diego, Riverside, Orange and Ventura -- all saw flat or negative price growth last month.
In fact, it was the first year-over-year decline in Orange County, the region's priciest home market, in more than a decade (November 1996). The median fell 0.4% to $620,000 as sales slipped 16.4%.
And it was the first month since April 1997 that Riverside County, one of the biggest new home markets, posted no growth with a median of $410,000, the same as the year before, as sales plunged 36.3%.
The region's slowing housing market is expected to grow even more sluggish over the next few months, industry analysts and economists say. That is because in the last few weeks lenders have toughened the rules for approving mortgages, especially for borrowers with weak credit scores and inconsistent incomes.
This burgeoning "credit crunch" is expected to keep many would-be buyers in Southern California and elsewhere on the sidelines and force many homeowners with onerous mortgage payments to sell or face foreclosure if they can't refinance.
One trend that may help explain why Southern California sales continue to decline is the drop in the rate at which borrowers are obtaining adjustable rate mortgages — usually the first choice of those stretching to afford a home. In February, adjustable rate loans represented 61% of all purchase loans, compared to 74% a year earlier, DataQuick said.
With February kicking off the official spring selling season for real estate, experts are waiting to see how fast the inventory of unsold homes grows as demand is curtailed. So far this year, the region's inventory levels, while 30% to 40% higher than a year ago, have not ballooned on a month to month basis.
In February, inventory of existing homes in Orange, Riverside and San Diego counties rose 3% or less from the month before, according to real estate brokerage ZipRealty Inc.
The higher year-over-year inventory "is putting pressure on other people not to put their homes on the market because they see other homes for sale on their same block," said Patrick Lashinsky, ZipRealty's president.
"The people who have to sell are selling, but others are being more cautious," he added.
He said that more recent listings coming appear to be priced at market rate or below. About 30% of sellers have reduced their prices as of March 2, according to ZipRealty data. That was an improvement over early November, when 40% of listings had price reductions.
Last month, San Diego County's median price fell 5.9% to $480,000 as sales dipped 5.7%, DataQuick said. San Diego's home prices have been declining for almost a year. It was the first Southern California region to see a boom in prices seven years ago and was the first to start trailing off.
The median in San Bernardino County rose 2.1% to $368,750 as sales dropped 31.4%. Meanwhile, Ventura County, the region's smallest market, saw its median fall 3.5% to $584,000 as sales declined 16.4%.
As reported Tuesday, Los Angeles County's median rose 7.8% to a record $528,000 as sales decreased $11.1%.
