Southern California Housing Market Struggles in the New Year

While you can usually count on Southern California to deliver beautiful weather the real estate forecast for 2014 appears to be a bit gloomy. DataQuick reports that 2014 started out with continued tight inventory, rising prices, rising interest rates and a shortage of baragin-priced foreclosed homes.

Last month there were 14,471 sales on new and previously-owned homes in the six county region of Southern California, which was down 21 percent from 18,415 in December and down 10 percent from 16,058 a year earlier.

Sales were 17 percent below the average 17,493 for a January dating back to 1988, when DataQuick began tracking the marker. That is not unusual, though, since the market collapsed in the middle of the last decade.

“Sales haven’t been above average for any month in more than seven years,” said DataQuick analyst Andrew LePage.

Sales have fallen below the year-ago level for four months in a row.
“Why? We’re still putting a lot of the blame on the low inventory. But mortgage availability, the rise in interest rates and higher home prices matter too,” DataQuick President John Walsh said in a statement.

“Two of the bigger questions hanging over the housing market right now are, how much pent-up demand is left out there and will inventory skyrocket this year as more owners take advantage of the price run-up?’”

The answers won’t be known until spring, he said.

Foreclosure sales — homes foreclosed on in the prior 12 months — accounted for 7 percent share of the resale market in January, up from 6 percent in December but down from down from 17 percent a year earlier.

Short sales made up an estimated 12 percent of Southland resales last month. That was down from 13 percent the prior month and down from 24.2 percent a year earlier.

The drop in distressed property sales and rising prices eroded affordability but that seems to have stabilized in the latter part of last year, according to the Los Angeles-based California Association of Realtors.
During the last three months of 2013 in Los Angeles County 44 percent of households could afford a median priced home costing $423,090. In the Inland Empire 44 percent of households could afford a median priced home costing $263,580, the association said Wednesday.

Statewide, 32 percent of families could afford a median priced home costing $431,510 in last year’s fourth quarter.

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