Southern California home sales at nine year low
August 2006
Latest home price data compiled by DataQuick revealed that Southern California home sales were at their lowest level in nine years in July. Price growth also slowed.
The sales total marked the lowest for a July since 1997, when 22,302 homes sold, and fell below the July average of 24,669 going back to 1988. The strongest July was in 2003, when 33,561 homes sold, while the weakest was in 1995, with 15,077 sales.
Sales have fallen 22.3 percent from 29,237 in June and are down 26.9 percent from 31,069 sales in July last year. DataQuick say this 22.3 percent fall in sales was the largest since they began tracking the market in 1988. The 26.9 percent year-over-year decline in last month's sales compared with July 2005 was the sharpest year-over-year drop since August 1992, when sales declined 29.9 percent.
Southern California home sales have now declined for eight months consecutively on a year over year basis.
Press reports attribute the surprising fall to factors such as increase in mortgage rates, increases in inventory and lack of affordability. Current average mortgage payments, adjusted for inflation, are about 6.2 percent above typical payments in the spring of 1989. DataQuick President Marshall Prentice suggested that recent low interest rates and fear of missing out have led many buyers to take the plunge earlier which is "why there's not more demand today". While data from a single month is not enough to signify the bursting of the housing bubble he felt that it could "be a sign of fast-petering demand for homes at today's prices" but concluded that "whether July's data also signal something more ominous at work in the market – something that would cause a severe correction in home values – is unclear to us. We'll know a lot more in a few months." The company also believes that "indicators of market distress are still largely absent."
Price growth over last year for Southland homes is at its lowest rate since October 1999 according to DataQuick. The median price was $492,000 in July . That was down 0.2 percent from June's record $493,000, and up 4.9 percent from $469,000 in July last year.
San Bernardino County, with lowest median price in the region,finished in double digits, with an 11.6 percent gain. It also had the smallest fall in sales for the region at 21.3 percent.
Both Los Angeles County, at $520,000, and Ventura County, at $634,000, posted record median home prices in July, but at the slowest rate in over five years.
The first Zillow quarterly home values report found that single-family homes in the LA Metropolitan Area appreciated at only about a third of their annualized rate for the past five years. Stan Humphries, Zillow director of advanced analytics said “It’s pretty clear that we’re beginning to see moderating price appreciation to more sustainable levels long term, however there are currently no signs of drastic downturns at this point in the greater Los Angeles region.”
The Zillow report found that the outlying communities of Altadena (91001), Northridge (91326) and Lancaster (93536, 93535) were among those that saw the highest rates, while Manhattan Beach (90266) and Huntington Beach (92648) had among the lowest. All the areas with lower appreciation rates in the second quarter, however, have had fairly robust appreciation over the past year," indicating the fairly recent nature of the price turndown".
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