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$1-Million Home Sales Hit Record in Quarter

Soaring housing prices and low mortgage rates combine to boost the number of expensive properties sold in California to 5,857, up 58% from last year.

November 26, 2003|From Reuters

For sale: Four-bedroom California home. Buyer must be braced for wildfires, earthquakes, an economy still lagging three years after the dot-com crash and a deepening budget crisis.

Price: $1 million and rising.

A record number of million-dollar homes sold in California in the third quarter as property prices soared and well-to-do buyers took advantage of still reasonably low mortgage rates, according to data released Tuesday.

Sales of the expensive homes were strongest in Southern California, rising 68% from a year earlier, DataQuick Information Systems said.

But even in the San Francisco Bay Area, home to the hard-hit high-tech hub of Silicon Valley, sales shot up by 48% from a year earlier, the La Jolla-based real estate information provider said.

"The expectations earlier this year were that sales of prestige homes would taper off as part of a general market slowdown. That hasn't happened," DataQuick President Marshall Prentice said. "Demand is still strong, and high-income households seem to think that property ownership is a relatively good investment."

A record 5,857 California homes priced at $1 million or more sold during the third quarter, up 58% from a year earlier, DataQuick said.

The continued boom has a lot to do with easier credit terms, said Kevin Clay, owner of Reign Financial, a real estate brokerage in San Carlos, Calif.

"Lenders are allowing buyers to come in with 20% down," Clay said. "In the past it would have been 35% to 40% down. Now buyers are getting into a $2.5-million house with $500,000 down compared with maybe $800,000 to $1 million in past years."

Nearly all homes in two California communities -- Ross in Marin County and Rancho Santa Fe in San Diego County -- sold for $1 million or more during the quarter, according to DataQuick.

The median million-dollar home sold in California was 2,877 square feet in size, had four bedrooms and three bathrooms and required a down payment of $443,500, DataQuick said.

Meanwhile, a separate report Tuesday by the California Assn. of Realtors showed strong demand for less expensive California homes amid the perceived need to lock in low mortgage rates.

"Despite the fact that mortgage interest rates have leveled off in recent weeks, consumers remain concerned about rates trending up in the coming months," Realtors President Ann Pettijohn said. "Those concerns continued to drive buyers into the housing market in October."

Thirty-year fixed mortgage interest rates averaged 5.95% in 2003, down from 6.12% a year earlier, according to mortgage giant Freddie Mac.

Leslie Appleton-Young, chief economist for the Realtors' group, said California's housing market reflects a persistent housing shortage throughout the state.

The median price of an existing, single-family detached home in California in October was $381,200, up 17.4% from $324,670 a year earlier.

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