California housing prices increased by more than 30 percent in June,
with inventory rising slightly in what is considered an encouraging sign for the
market, a trade association said Tuesday.
Last month, the median price of a previously owned house soared 33.5 percent across the state from a year ago to $428,510, according to the California Association of Realtors.
The tight inventory, which had been holding back sales, rose to a 2.9-month supply of properties last month, up from 2.6 in May but still below the 3.5-month inventory of a year ago, the association said.
Sales of previously owned houses statewide declined 3.7 percent to an annualized rate of 414,950 units. This is the number of home sales that would occur if the market matched June's pace for the entire year.
Leslie Appleton-Young, the association's vice president and chief economist, believe the slight uptick in available homes is a good sign. "The inventory is the big thing. That's the most important leading indicator for the housing market," she said.
Rising home prices may encourage more owners to put their properties up for sale in the coming months, but June's inventory level is still well below the six- or seven-month supply considered normal. "I think it's going to go up some more. You've got buyers taking more time [making decisions], and some are priced out by the rising prices and the interest rates. And I think you have sellers who came in too high, so their properties are staying on the market and not moving," Appleton-Young said.
Still, the tight inventory and increased buyer competition has driven down the time properties stay on the market compared with a year ago. In June, homes sold in a median of 27.7 days, up slightly from 27.1 days in May but down from 43.5 days in June 2012.
In the Los Angeles metro area -- the combined Los Angeles, Orange, San Bernardino, Riverside and Ventura counties -- the median price of a single-family home for sale jumped 31.7 percent from June 2012, to $392,470, and sales declined 9.5 percent.
In the Inland Empire, the median home price increased an annual 33.2 percent, to $248,760, while sales fell 15.2 percent.
Double-digit-percentage price gains were the norm around California. This has been the trend for several months, as supply of low-priced foreclosed and short-sale properties have dwindled. "They're gone, they're gone," Appleton-Young said. "Investors have really picked that market clean."
Interest rates are now putting some pressure on the market. The rate on a 30-year mortgage was in the 3.5 percent range until the middle of last month, then spiked above 4 percent shortly after Federal Reserve Chairman Ben S. Bernanke said the agency may reduce its economic stimulus and possibly stop it entirely next year. He then backed off, saying last week the economy needs the Fed's help for the "foreseeable future," and rates dropped a bit.
Michael Carney, executive director of the Real Estate Research Council at California State Polytechnic University, Pomona, and a professor of finance and real estate there, said Bernanke has been basically driving the housing market via the Fed's $85 billion a month in bond purchases. Typically, significant housing price jumps foreshadow a big drop.
"Big price increases are not a good sign," Carney said. "In my view, it's a pretty unusual market." Rising prices should stimulate inventory, but he notes that is not happening. "There are not enough homes on the market, and it's kind of a mystery to me."
@dngregwilcox on Twitter
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