Southern California home prices in April rose at their slowest clip in more than a year, a welcome sign for would-be buyers who have been priced out of the housing market. Sticker shock has taken some wind out of the housing recovery in the last year. Higher prices and mortgage rates have pushed many families and investors to the sidelines, causing sales to tumble and prices to moderate.
For the first time since September 2012, more than one Southland county posted annual price increases that weren’t in the double digits, research firm DataQuick said Tuesday. In Orange County, the median home price rose 7.7% from April 2013 to $576,000.
Most economists say they see the moderation in prices as a stabilizing influence, not an indicator of a downturn. The shocking gains seen last year were simply unsustainable, they said, and the recent slowdown has positives: It’s assuaged concerns of another housing bubble.
“There is no way prices will fall,” he said, adding there is simply too much demand and not enough supply.
Richard Green, director of USC’s Lusk Center for Real Estate, said he also doesn’t expect a downturn, but neither does he see much price appreciation.
“Prices now are about where they should be — given how high rents are in Los Angeles,” he said.
“The housing market’s pulse quickened a bit in April,” DataQuick analyst Andrew LePage said in a statement.
It’s unclear, however, whether April was an anomaly or the start of a larger trend.
Mortgage rates may bring some additional relief. Experts predicted rates to rise sharply in 2014, another increase on top of last year’s jump, which they blamed for slowing the market. But that hasn’t happened.
Lenders, on average, offered a 30-year fixed mortgage at 4.21% early last week, the lowest rate in six months, according to mortgage giant Freddie Mac. Although higher than last spring, rates are still relatively low historically.
LePage of DataQuick said he expects sales figures to gradually turn around as buyers have more options.
“If the inventory grows more, which we consider likely, it’s going to make it a lot easier for sales to reach at least an average level, which we haven’t seen in more than seven years.”