Reports of real estate's decline have been greatly exaggerated, to paraphrase Mark Twain.
Southland home prices, especially in the entry-level market, continued to rise robustly during the first quarter of 2005, according to data released Thursday. Home appreciation at the higher end of the price spectrum is slowing compared with last year, but sales are still strong.
Although not on a par with the record-breaking pace of early 2004, the number of home sales across the board is "way above the norm," said John Karevoll, chief analyst at DataQuick Information Systems, a La Jolla real estate research firm.
Sales of houses and condominiums in Southern California in January, February and March were down 3.3% compared with a year ago, but that still was the second-best first quarter in 17 years.
The median price of a home in Los Angeles County during the first quarter of 2005 was $428,000, up 18.6% from the same period a year ago, according to DataQuick. The median in Orange County was $554,000, up 17.1%.
The slight slowdown from last year's 20%-plus rate of appreciation in median prices is welcome news, analysts say.
"The pace of appreciation was quite unsustainable in the middle of last year," Karevoll said. "Right now it looks like we're headed for a soft landing. No one will get hurt."
In the million-dollar-plus range, which some experts view as a bellwether of the market as a whole, prices dipped in some areas late last year. Currently, those homes are appreciating again but not at the levels of the last two years, according to DataQuick. The high end is notoriously fickle, however. It can experience home-price depreciation for a few months, then shrug it off and bounce back.
Raphael Bostic, an economist with USC's Lusk Center for Real Estate, conservatively estimates that home price appreciation could end up at 5% to 7% by year's end.
The California Assn. of Realtors forecasts a more bullish 15% increase in home prices this year, while California sales are expected to drop 2.5%, said chief economist Leslie Appleton-Young.
"We'll still see a strong season," she said.
An array of easy-to-get mortgages, an intense demand for housing -- especially at the entry level and in some move-up markets -- and a sense of urgency to buy before interest rates climb higher have buyers still flocking to open houses, agents say. Creative financing options, such as negative-amortization loans, have helped even the most credit-challenged borrowers enter the real estate market.
