Housing Decline Persists in Southern California Counties

The Southern California housing market remained in the doldrums during October, sinking to a 10-year low for that month as prices contined to flatten, the Los Angeles Daily News reports.

Last month, consumers in the six-county region bought 22,117 new and previously owned houses and condominiums, 22.4 percent fewer than a year ago and off 2.4 percent from September.

October’s monthly total is the lowest for ths segment of the California housing market since 1996, when 18,505 properties changed hands. Sales for the month have ranged from a low of 14,608 in 1991 to a high of 32,522 in 2003.

The median price declined in two counties and increased in the others.

“We’re just seeing the market kind of settle in,” said John Karevoll, an analyst for Dataquick. “Looking at the trend in general, it appears we will probably have (price) numbers going negative in Southern California year over year sometime late this year or early next year.”

And while sales are well under the level of last year and 2004, those were exceptionally strong markets, Karevoll noted. During October:

• In Los Angeles County, prices climbed 4.5 percent to $514,000 and sales fell 21.8 percent to 7,622 transactions.
• Ventura County’s median price fell 2.3 percent to $582,000 and sales fell 19.6 percent to 940.
• In Riverside County, prices rose 4.9 percent to $410,000 as sales dropped 24.2 percent to 4,200 units.
• San Bernardino County’s median price increased 2.3 percent to $362,000 and sales fell 21.3 percent.
• Orange County’s median price increased 3.1 percent to $625,000 and sales fell 24.9 percent to 2,715.
• In San Diego County, the prices fell 5.5 percent to $485,000 and sales declined 21 percent to 3,282.

Throughout Southern California, the median price increased 2.3 percent to $484,000. As demand for California home loans has lessened this year with the market cooling off, the percentage price increases have been in single digits for seven consecutive months.

“It’s harder to buy a home if you think it might go down in value than it is if you’re convinced it’s going up. Potential buyers are taking their time, trying to wait out the uncertainty in a market that is rebalancing itself,” DataQuick President Marshall Prentice said.

In October, buyers paid an average monthly California mortgage payment of $2,287, down from $2,309 the previous month and up from $2,169 a year ago. Adjusted for inflation, current payments are 1.7 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle.

And they are 6.4 percent below the current cycle’s June price peak.

DataQuick reported that signs of market distress remained at a moderate level last month. Adjustable-rate financing is flat and down payment sizes are stable, as are flipping rates - buying a house in hopes of turning a quick profit. Nima Nattagh, an analyst and consultant for mortgage lenders, said the market is following predictions made earlier in the year.

“I still maintain we’re not going to see a major decline in prices but prices will remain soft for the remainder of the year,” he said.