By Roger Showley, UNION-TRIBUNE STAFF WRITER
S.D. County's 15.8% climb best among those in report
Southern California home prices last month rose 14 percent from a year ago to a median $285,000, MDA DataQuick reported Tuesday, further evidence that the region’s real estate market is stabilizing.
Sales were up for the 21st consecutive month, as transactions involving higher-priced, move-up homes kicked in to broaden the market beyond low-cost starter homes.
Economists read the latest figures as indicators that the housing plunge is mostly over, but said a general upturn is unlikely soon because of rising interest rates and sluggish job growth. They also cautioned against assuming a 14 percent rise in the median translates into a 14 percent increase in individual property values. Instead, the figure reflects a change in the types of properties being sold.
San Diego County’s median price, as reported Monday, rose the most of the six counties evaluated — up 15.8 percent, compared with a year ago, to $330,000. Ventura County followed, up 15 percent to $375,000.
In contrast, San Bernardino County prices were up 1.3 percent to $152,000, followed by Riverside County, up
5.9 percent to $198,000. Both counties have felt the brunt of the housing slump, as overbuilding outpaced demand and thousands of homeowners defaulted on mortgages.
Sales across the region totaled 20,476, up 5 percent from March 2009. But that was below the 23-year average of 24,936. San Diego sales totaled 3,227, up 6.9 percent, while Los Angeles County rose the most, up 13 percent to 6,747. Riverside sales dropped 5.7 percent and Ventura’s were down 4.8 percent — signs that demand is not rising consistently throughout the region.
“It’s a reflection of just how grim things got that we’ve now had almost two years of sales gains and we’re still 18 percent below the sales average,” said DataQuick President John Walsh.
He said more sales activity won’t take place until lending patterns normalize. He singled out higher-end jumbo loans, traditionally involving mortgages for more than $417,000. They accounted for 15.7 percent of March loans, up from 14.8 percent in February but far behind the 40 percent level before the fall 2007 credit crisis.
Among other findings in March, DataQuick said foreclosure resales dropped to 38.4 percent of the overall resale market, down from 42.3 percent in February; adjustable-rate mortgages accounted for 4.8 percent of loans, up from 4 percent in February and 2.1 percent a year ago (their market share since 2000 is 44.6 percent); and all-cash buyers accounted for 27.1 percent of March sales, down from February’s 30 percent record.
Economist Esmael Adibi at Chapman University’s A. Gary Anderson Center for Economic Research welcomed the price and sales increases as signs of a stabilizing market.
“We’re not seeing further deterioration in prices,” he said. “We’re seeing some improvement, and part of that is the mix.”
Instead of sales being dominated by low-cost distressed properties, the mix of properties being sold now includes high-priced, move-up homes.
“I don’t want people to have a false hope that there’s really an improvement in value,” he said.
As 2010 progresses, the differences with 2009 will lessen and the year-over-year change will likely dwindle.
“Even if values are not changing and my home has not increased, the fact that it is stabilizing, that’s good news,” he said. “We’re not seeing further deterioration in prices.”
Economist Christopher Thornberg at Beacon Economics said he thought values have increased, mainly at the starter-home level. But in the next few months, he thinks housing prices will weaken because of the end of the federal and state tax rebates for homebuyers and rising interest rates.
“I think we’re going to see this little party is going to slowly end,” he said. “This rally is just going to fade away.”
Thornberg said the federal government’s economic stimulus policies have done what was intended — increase housing demand and stabilize the market.
“The problem is the policies are coming to an end, and when they do, I fully expect the market is going to slump again,” he said.
Even if the economy improves, housing will not necessarily improve with it, he added: “It’s pretty clear a strong economy doesn’t mean a wonderful housing market.”
However, he said homes are at least are more affordable than they were five years ago. But he said that, too, is likely to fade as interest rates continue to rise.
Wells Fargo Securities senior economist Mark Vitner predicted a 6 percent to 8 percent backslide in Southern California home prices.
“The true underlying demand for homes will not improve until employment picks up in a clear and convincing way,” he said in an e-mail. “That said, most of the damage has already been done.”
Paul Habibi at the UCLA Anderson School of Management took a longer perspective, predicting five more years of sluggish home prices and then a major pickup in housing construction.
“The economic fundamentals of Southern California are promising,” he said. “We’re definitely going to have another development cycle.”
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