Southern California home prices jumped in December, the first significant increase since June.
The median sale price in the six-county region hit $395,000 last month, a 2.6% gain from November and 22.3% over the same month a year earlier, research firm DataQuick reported Tuesday. The firm attributed the rise to fewer distressed sales and demand that has outstripped tight supply.
It’s too soon to tell if the monthly increase signals the return of aggressive price appreciation. The spring home buying season will provide a better look into the market’s health.
“The problem with one month of data is it could just be noise,” said Richard Green, director of USC’s Lusk Center for Real Estate.
But if the sharp gains continue through this year, it could renew concerns of a bubble.
“A pop from here would be a problem,” Green said.
What’s clear is that sales continue to decline, signaling a persistent shortage of homes. Buyers scooped up 18,415 new and resale houses and condos last month, the lowest level for December in six years. Sales tumbled 9.2% from December 2012.
“The pitifully low inventory is the main culprit,” DataQuick President John Walsh said. “The jump in home values over the last year suggests we’ll eventually see a lot more people interested in selling their homes, which would help ease the inventory crunch.”
The December data cap a whirlwind year for Southern California real estate. Home prices rose swiftly through the first half of the year, as investors and families battled over a meager supply of homes.
The market then cooled through the summer and fall as higher prices and mortgage rates damped demand, and the market entered a typically slower period. Most experts predict prices will rise again this year, but at a measured pace. The spring home buying season will provide insight into whether those predictions will hold.
“This is the dead season. What happens in March matters,” said Bill McBride, who writes the financial blog Calculated Risk.
Still, experts said the housing recovery continued to normalize. Sales of foreclosed homes and short sales have declined dramatically over the last year. Another positive sign is strong new home sales and housing starts nationally, McBride said.
In Southern California, new home sales rose 7.3% compared with December 2012. In pricey Orange County, new home sales more than doubled.
Homes in the typical move-up range — an important link in a healthy housing market — increased slightly. Sales of homes priced from $300,000 to $799,999 increased by nearly 2% last month compared with a year earlier.
The December increase in the median home price reflects, in part, more sales in costlier neighborhoods, according to DataQuick. The median is influenced not only by a general rise in values but also by a change in the mix of homes selling. The median is the point at which half the homes sold for more and half sold for less.
Meanwhile, sales of lower-cost homes plunged as inventory in those neighborhoods remains extremely tight. Many homeowners there still owe more on their mortgages than their houses are worth, limiting their ability to sell, and investors have scooped up many homes in affordable communities to flip or rent out.
As the housing recovery continues, Green said, it will be more robust along the coast, where the economic recovery is healthier — a disparity that has raised concerns among economists.
“The fundamentals of the Inland Empire are bad,” Green said. “It’s a very different economy than Playa Vista, Santa Monica or Huntington Beach.”
