Southern California home prices up 25% over last May

Southern California's housing recovery barreled forward last month, pushing prices and sales to levels not seen in years as buyers faced stiff competition during the spring home buying season.

The median price reached $368,000 for all homes in the six-county Southland, which marked a 24.7% increase from the same month a year earlier and the highest price in five years. The number of sales, 23,034, hit the highest level for a May in seven years, real estate information
provider DataQuick said Tuesday.

Historically low inventory and mortgage rates have ignited bidding wars and helped turn the housing market into an economic bright spot — in the Southland and nationwide. Investors have also played a major role in the recovery that began last year, purchasing run-down, lower-cost properties to fix up and then rent out.

Home prices in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties all posted double-digit increases last month compared with May 2012. In Los Angeles, the median skyrocketed 30.2% to $410,000.

"We're deep into uncharted territory: Amazingly low mortgage rates, a razor-thin inventory of homes for sale, and the release of years' worth of pent-up demand," John Walsh, DataQuick president, said in a statement. "How this all plays out is educated guesswork at this point."

The swift price increases have raised bubble concerns among some, but many experts note prices remain far from the peak and say the spikes will likely ease as inventory increases from new home construction and as more owners — lured by higher prices — place their homes on the market.

Still, May's median price was 27.1% below a peak of $505,000 in 2007.

The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling as well as a general rise or fall in values. DataQuick said that most of May's increase could be attributed to a general rise in value, while about a quarter came from a change in the types of properties sold.

Homes priced $500,000 or more increased to 31.3% of all home sales, the highest percentage since February 2008.
Meanwhile, homes selling for under $200,000 declined as investors flush with cash have already scooped up many of those properties.

Sales declined in Ventura, Riverside and San Bernardino counties but increased in Orange, Los Angeles and San Diego counties.

The sales of distressed properties also continued to fall. Homes that had been foreclosed upon within the last year comprised an estimated 10.8% of resold homes in May, a decline from 26.9% a year earlier.

Written by Andrew Khouri, Money & Co

Economy Watch: Fewer Homes Underwater in Q1, SoCal Housing Sales

CoreLogic reported on Wednesday that about 850,000 U.S. residential properties were no longer underwater as of the end of the first quarter of 2013 or, as the company put it, "returned to a state of positive equity." All together, the owners of roughly 39 million mortgaged residential properties have at least some equity in their properties.

That leaves about 9.7 million properties as of the first quarter of 2012 that do not have any equity, or 19.8 percent of all properties with a mortgage. That's still a high percentage, but at least it's down from the fourth quarter of 2012, when 10.5 million property holders were underwater, representing 21.7 percent of the total, according to CoreLogic.

In other words, the underwater mortgage problem is still bad, but not quite as bad as it has been, mainly because of the recovery of many housing markets. Nevada still has the highest percentage of mortgaged properties in negative equity at 45.4 percent, followed by Florida (38.1 percent), Michigan (32 percent), Arizona (31.3 percent) and Georgia (30.5 percent). These top five states account for nearly a third of all negative equity nationwide, the company calculates.

"The impressive home price gains of 2012 and the beginning of 2013 have had a big impact on the distribution of residential home equity," Mark Fleming, chief economist for CoreLogic, said in a statement. "During the past year, 1.7 million borrowers have regained positive equity. We expect the pent-up supply that falling negative equity releases will moderate price gains in many of the fast-appreciating markets this spring."

SoCal Housing Sales Up

DataQuick, a real estate data specialist in southern California, reported on Wednesday that the sales velocity of residential properties in that part of the state — Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties – was at its highest level in seven years. Also, median sales prices were at a five-year high. The SoCal residential market is an important bellwether for the national market because of its size, but also because it took such a pummeling during the housing crash.

A total of more than 23,000 new and resale properties traded hands in the six counties in May, up 7.6 percent compared with April, and 3.8 percent compared with May 2012. The most recent total is the highest May total since May 2006, when more than 30,000 units were sold, but it's still well below the long-term average sales each May since 1988, which is more than 25,600.

A good many of the recent sales seem to be investors – or speculators – so it's hard to say exactly what the run up in sales portents. "We're deep into uncharted territory: Amazingly low mortgage rates, a razor-thin inventory of homes for sale, and the release of years' worth of pent-up demand," John Walsh, DataQuick president, said in a statement. "Plus there's a seemingly endless stream of investors and non-investors … How this all plays out is educated guesswork at this point. Understandably, speculation continues over whether another housing bubble is forming."

Buyers paying with cash accounted for 31.9 percent of May's home sales, compared with 34.4 percent the month before and 32.1 percent a year earlier. The peak was 36.9 percent this February, and since 1988 the monthly average is 16.1 percent.

Written by Dees Stribling, Contributing Editor, Commercial Property Executive

Southland home prices surge in April as inventory tightens

Homes in Southern California sold at the fastest clip for April in seven years. The median price for the region reached its highest level since June 2008.

A frustrating housing market for Southland buyers swelled in April as prices surged and inventory tightened.

Homes sold at the fastest clip for that month in seven years, as regular buyers and investors snapped up more than 21,000 homes in the six-county region, real estate firm DataQuick reported Tuesday. That was a 4.1% increase from March and a 9.5% jump from a year earlier.

Demand for move-up and high-end homes surged as mortgage interest rates remained near historic lows. Investors remained a significant force, and for-sale inventory remained well below last year's levels, underscoring the competitiveness of the market.

"You are seeing strong demand against very limited supply, and that's putting upward pressure on prices," said Esmael Adibi, director of Chapman University's A. Gary Anderson Center for Economic Research.

The median price for a Southland home last month reached $357,000, up 3.3% from the previous month and 23.1% from April 2012. It was the highest level for the region's median home price since June 2008, when it hit $360,000.

The median price is the point at which half of homes sold for less and half for more. The data represent completed sales, meaning the increases are representative of buyer demand in early April and previous months.

The market has heated up even more since then, real estate agents said.

"If anything, it seems like things have gotten more crazy," Lakewood real estate agent David Emerson said.

The median has increased year over year for 13 consecutive months, with double-digit gains in every month since August. The median nevertheless remains 29.3% off its peak of $505,000, from summer 2007.

"From an affordability perspective, this remains an excellent time to buy," said Stuart Gabriel, director of UCLA's Ziman Center for Real Estate. "The price movements in the middle to upper ranges is consistent with a market that is normalizing."

Median prices are rising in part because higher-end properties are selling faster than entry-level homes. But other price measures that seek to account for the mix of homes sold have also confirmed a fast-rising market. The Standard & Poor's/Case-Shiller index indicated that prices in the Los Angeles metro area, which includes Los Angeles and Orange counties, had risen 14.1% year over year in February.

The eye-popping price gains have unleashed a debate about how long they will last.

Syd Leibovitch, president of Rodeo Realty, predicts home prices will post significant increases into 2015.

"You haven't seen anything yet," Leibovitch said. "We are still just correcting."

Others predict price gains will slow as more inventory comes onto the market. Glenn Kelman, chief executive of online broker Redfin.com, said he's seeing more inquiries from potential sellers.

"People we are talking to about selling their homes are getting more interested in it," Kelman said. "We are starting to see bidding wars ease slightly. They were very intense a month ago, with usually more than 10 offers, and now it's more like three or four."

The number of listed homes increased slightly in April but remained low, according to Realtor.com. In Los Angeles County, listings were up 1% from the previous month but down 45% from the same period a year earlier. In Riverside and San Bernardino counties, inventory was down 1% from the prior month and 36% from the same month a year earlier.

Written by Alejandro Lazo, Los Angeles Times