Living La Vida Local
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homes sold between Jan. 1 and June 30. According to the Multiple Listing Service, sales prices are currently averaging $1,794 per square foot, a 20 percent rise from June 2004. Volume is slowing, with 170 homes sold during the same period in 2004; 200 in 2003.

In the condo market in 2005, 279 condos sold between Jan. 1 and June 30. Condo sales prices are currently averaging $680 per square foot, and prices are up more than 30 percent from June 2004. Again volume is down with 338 units sold during the same period in 2004. In 2003, 332 condos sold.

Properties remain on the market between one and two months, and selling at asking price. Santa Monica mirrors the rest of California. Statewide, prices continue to climb with a median-priced home now averaging $509,230. Prices around the Southland crossed the half-million-dollar threshold for the first time in April, as affordability fell to 17 percent, according to the California Association of Realtors.

The minimum household income needed to purchase a median-priced home at $509,230 in California in April was $120,290, based on an average effective mortgage interest rate of 5.92 percent, assuming a 20 percent down payment, and assuming the monthly payment for principal, interest, taxes and insurance is no more than 30 percent of a household’s income. April’s minimum required income was up from $102,350 in April 2004, when the median price of a home was $452,680 and the prevailing interest rate was 5.42 percent.

“The first quarter of 2005 was the 39th consecutive quarter in which all nine regions of the United States had positive annual home price growth,” said Amy Crews Cutts, Freddie Mac deputy chief economist.

It has been estimated by the California Building Industry Association that the state’s housing boom has generated $1 trillion in increased home equity since 2000 and has pumped billions of dollars into the state’s economy.

Alan Nevin of the California Building Industry Association observed that median equity gain for those who owned a single-family home in 2000 was $230,386, while the median equity gain was $200,544 for condominium owners. Homes in Los Angeles County have appreciated $82.16 billion since 2000.

“For the person who owned a single family home in the year 2000 and bought that home with a 15 percent down payment, their return on equity would be approaching 1,000 percent,” Nevin said. “Economists and housing experts have known for years that home ownership is the leading source of wealth creation for the vast majority of Americans. Now we have a better feeling for just how much wealth home ownership has created here in California.”

The California Building Industry Association study found that the 2.5 million homes purchased since 2000 have increased in value about $378.7 billion, while the 4.3 million homes owned but not sold in that time period have increased in value by $641 billion.

To burst that bubble, PMI Mortgage Insurance Co. notes that there is a 16.1 percent probability of an overall house price decline over the next two years in the nation’s 50 largest housing markets.

The five metropolitan areas least likely to exhibit home price declines over the next two years are Indianapolis, Rochester, NY; 59, Oklahoma City; 57, Buffalo-Niagara Falls, NY; 57 and Pittsburgh; 57.

 

For more on Southern California commercial properties there is a great information blog at www.socalindustrialrealestateblog.com.