Living La Vida Local
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family home sold between January 1- September 30, 2005 – with about 60% of the properties on the market selling each month. Sales prices are currently averaging $1,590,000. Volume is slowing. Last year, 258 homes were sold during the same period– when 70% of the volume was moving at a median sale price of $1,425,000. Take note, there were 300 single-family homes sold in the first three quarters of 2003 at a median sale price of $1,000,000. Volume moved was around 72% of available homes.

In the condo market, the MLS reports that 461 condos sold between January 1- September 30, 2005 – 78% of the units available. Condo sales prices are currently averaging $680,750. Again volume is down. 517 units changed hands during the same period in 2004, at a median sale price of $626,500 – 86% of available units sold. The rush was on in 2003 with 566 condos – a juicy 97% of the market - sold at a median price of $460,500.

"Inventory levels in recent months were nearly double that of a year ago," observed Leslie Appleton-Young, California Association of Realtors vice president and chief economist. "This has contributed to the increased pace of home sales in the presence of continued strong demand for housing in California."

In the Southland, the median number of days it took to sell a single-family home was 29 days in August 2005, compared with 26 days for the same period a year ago, offered DataQuick information services.

Another interesting statistic on single family homes in Santa Monica comes from Coldwell Banker, whose research revealed that the top-10 most expensive markets overall in 2005 are: LaJolla, Calif.; Santa Monica, Calif.; Beverly Hills, Calif.; Santa Barbara, Calif.; Palo Alto, Calif.; Newport Beach, Calif.; San Mateo, Calif.; San Francisco, Calif.; San Jose, Calif.; and Greenwich, Conn.

In August, statewide, the median price of an existing home in California in August increased 20.1% to a record $568,890; sales increased 7% reported the California Association of Realtors.

The median for resale houses was $501,000, passing the $500,000 mark for the first time. The median for resale condos was $403,000, passing the $400,000 mark for the first time.

“This was the second strongest August sales figure on record dating back to 1979, surpassed only by August 2003,” stated C.A.R. President Jim Hamilton.

C.A.R. notes that mortgage rates are moving steadily toward 6 percent, and the 10-year T-note, itself marching toward 4.3 percent. Adjustable mortgage interest rates averaged in the vicinity of 4.25, compared with 4.1 percent a year ago.

“While fixed mortgage interest rates have not increased, adjustable rates have risen in reaction to the Federal Reserve and a more general increase in short-term rates,” offered Hamilton. “Since more buyers are relying on adjustable-rate mortgages to finance the purchase of their homes, buyers may be moving more quickly to make the home purchase decision in anticipation of future rate increases.”

The housing affordability index has dropped to16 percent. The minimum household income needed to purchase a median-priced home at $568,890 in California is in the vicinity $127,870, based on an average effective mortgage interest rate of 5.71 percent and assuming a 20 percent down payment. This income figure was up from $111,420 in June 2004, when the median price of a home was $468,050 and the prevailing interest rate was 6.01 percent.

DataQuick reports that indicators of market distress are still largely absent. Foreclosure activity has bottomed out, but is still low. Down payment sizes are stable, as are flipping rates and non-owner occupied buying activity. Across SoCal, prices have risen around 15% from a year ago.

Analysts site two significant factors contributing to continued strong sales. One is the prevalence of "innovative" mortgage products and lower-than-expected interest rates. Secondly, more European dollars, especially from France and The Netherlands, have been dumped into United States Treasury securities, supporting lower long-term home mortgages rates.

While we bask in our housing boom, keep in mind that the U.S. ranks sixth on the list of the highest house-price increases worldwide. ResearchWorldwide.com, which monitors 23 nations, reported that home prices jumped about 23.3% in South Africa from June 2004 to June 2005, while leaping 21.4% in Hong Kong. The United States was sixth on the list, with home prices up 14.7 percent from June 2004 to June 2005.