Home Prices in Parts of State Reach Highest Levels in 5 Years
by Michele Dawson
While the California housing market has been riddled with gloom and doom in recent years, parts of the state are experiencing sales prices at their highest levels since 2008, according to the California Association of Realtors.
California Home Appreciation
To get a statewide snapshot, the median price of an existing, single-family detached home increased by 13.7 percent from $333,380 in February this year to $378,960 in March. That one-month jump is the largest since the association started keeping tabs on statewide sales in 1979. Compared to March 2012, this year’s March price jumped 28.2 percent.
In addition to robust sales in higher-priced, high-cost regions, the soaring prices can also be attributed to the dwindling number of houses on the market.
“No doubt the dearth of home listings is driving the upsurge in the median price, as is an increase in sales in the higher-priced segments,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Sales of homes priced $500,000 and higher are up more than 34 percent from last year, and have been on a rising trend since early 2012. Sales growth in the coastal regions – Marin, Orange, San Diego, and San Luis Obispo, in particular – helped push the statewide median price up to the highest level in more than four years.”
In fact, the inventory statewide has plummeted by 36 percent from March 2012 to March 2013 and entry-level and lower-priced homes hitting the market are few and far between.
“… Supply conditions are particularly tight in the lower-priced segment of the market, as inventory for homes priced below $300k plunged more than 50 percent from the previous year,” said C.A.R. President Don Faught.
Hot Real Estate Regions
In San Diego County, the median sales price was $432,000 in March — 5 percent higher than February and almost 19 percent above March 2012, according to the Greater San Diego Association of Realtors.
In North San Diego County, the median price for a single-family detached home was $525,000 in March 2013 — an 11 percent increase over the $472,500 sales price in February and the highest price in the county since 2008.
Over in Orange County, the median sales price in March 2013 was $619,430 — a good jump from the month prior when it was $607,230. And even more impressive is the sales price a year ago, when it stood at $485,300.
Multiple offers are now commonplace in Orange County, reports the May 2013 issue of California Real Estate magazine, published by the state Realtor group.
“We went from having a lot of inventory and no buyers to having a lot of buyers and no inventory,” Len Herman, a Realtor at Keller Williams Realty in Mission Viejo, told the magazine.
Up north in Marin County, the median sales price of a detached, single-family home was $795,985 in February 2013. That number jumped to $850,000 in March, according to the Marin County Assessor’s Office.
Anastasia Sheldon, a Realtor with Marin Modern Real Estate, says in an April 30 blog entry that the dramatic upswing in prices comes down to jobs.
“Interest rates are great nationally and local inventory is low now that the distressed properties are drying up,” Sheldon said. “However, the biggest difference that sets the Bay Area apart: Bay Area companies began outfitting for hiring two years ago by acquiring office space and building out those spaces. Technology, investment and medical science sectors were poised to hire by early 2012.”
As new workers began looking for housing, many were forced farther north as prices in San Francisco were just too steep for many.
She said Central and Southern Marin agents now anticipate at least 100 visitors to an open house and most houses receive three, four, or even more offers with a contract in place within 10 days of the house going on the market.
The National Outlook
Meanwhile, the national median price for existing homes went up 11.8 percent from March 2012 to March 2013, when it was $184,300, according to the National Association of Realtors.
That year-to-year increase was the strongest since November 2005.
NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said homes are selling much faster. “The typical home sold in March was on the market for one month less than it took to sell a year ago,” he said. “Multiple bidding is becoming more common, and more homes are selling above the asking price …”
Lawrence Yun, NAR chief economist, said there is more demand than supply in the current market. “… Housing inventories have trended much lower,” he said, “which is continuing to pressure home prices. The good news is home construction is rising and low mortgage rates are continuing to keep affordability conditions at historically favorable levels. The bad news is that underwriting standards remain excessively tight, while renters are getting squeezed by higher rents.”
Yun continued, “Buyer traffic is 25 percent above a year ago when we were already seeing notable gains in shopping activity.”
Indeed, home buyers in California and across the U.S. seem to be out in droves, pushing up home prices.
Michele Dawson has been a writer for more than 20 years and now specializes in informing the consumer about real estate. She has written for the Sacramento Business Journal, California Builder Magazine, and many other publications.