Riding on California's economic expansion, first-quarter sales of existing homes reached the highest level in seven years as the state's housing market continued to dig itself out from a deep slump, according to a real estate survey released Thursday.
The median sales price during the January-March period also continued to improve, but at a much more modest pace than sales. The statewide median sales price rose 0.5% from the previous quarter to $174,600, according to figures compiled by the California Assn. of Realtors.
"The rebound in the California housing market we first witnessed in 1995 has now reached significant proportions and reflects a rejuvenated economy statewide," said association President Bob Kulick in a statement.
During the first quarter, 531,160 single-family homes were sold on a seasonally adjusted, annualized basis, according to the real estate report. The quarterly sales figures--which do not include sales of new homes or condominiums--represent a 7.3% increase from the fourth quarter of 1996.
The first-quarter results were the highest since the first quarter of 1989, when 601,730 homes were sold on a seasonally adjusted, annualized basis.
The quarterly sales report is in line with other recent home sales and price surveys that show a slow but steady improvement in the state housing market. The real estate market has begun to turn around throughout much of Southern California but at a slower pace than in Northern California.
"The continuing home price increases in the northern part of the state have now filtered south to San Diego, Orange and Santa Barbara counties," said Leslie Appleton-Young, chief economist for the Realtor group. "Although not evident in all sectors of Southern California, we can still detect clusters of home-price appreciation, even in counties still experiencing a drop in the median home prices."
Real estate broker Fred Sands said sales on the Westside of Los Angeles, for example, were very strong during the first quarter. The company's agents opened escrow on 14% more homes during the first three months of the year than during the same period last year, Sands said.
"The market has made its transition. This should be a banner year."
Despite concerns triggered by a surge in mortgage rates, the real estate market should benefit from a recent move to make proposed changes in the capital gains tax retroactive to May 7. The decision by congressional budget negotiators could spur many homeowners--particularly elderly residents--to put their homes on the market instead of waiting until a final resolution.
"A lot of [homeowners] were waiting for this before they make their move to sell," said Sands, who noted the shortage of available homes for sale. "This will enhance our inventory."