Southern California's median home price climbed for a fourth straight month in August, boosted by investors snatching up homes in distant suburbs and a relative decline in foreclosed homes for sale, a real estate research firm reported Tuesday.
The median price inched up 2.6% from July to $275,000, according to MDA DataQuick. The market bottomed out in April at a $247,000 median, the San Diego company said.
Behind the price improvement are investors like Robert S. Moore, a Rancho Palos Verdes management consultant, who is wrapping up his third home purchase in as many months. Moore, 50, is paying $90,000 for a four-bedroom house in the Riverside County city of La Quinta, which he plans to rent out for at least 10 years.
"How much lower can it go? I'm buying them for less than it costs to build them," Moore said of his investment properties.
Investors made up 20% of purchases in August, up from 17% in January. When homes can be bought for less than $100,000, Moore said, the risk of further price declines is hardly worth worrying about.
Even with last month's increase, the median price remains at 2002 levels. It is down 45.5% from its peak of $505,000 reached in 2007, and 16.7% below the same month a year ago. The median price is the point at which half the homes sold for more and half for less.
Although investors and first-time buyers are firming up prices of low- to mid-priced homes, UCLA economist Edward Leamer cautioned that movements in the median price were more a reflection of the number of foreclosed homes on the market and that the housing market remained soft.
"The fraction of homes sold by banks is on the decline," he said. "The typical homeowner shouldn't think the value of their home is moving along the same lines."
And although home values are still dropping in many neighborhoods, rising home sales and median prices are "all symptomatic of a bottoming out" and the worst days of the housing market are probably over, Leamer said.
Foreclosure sales accounted for 38.8% of homes sold in August, down from a peak of 56.7% in February. DataQuick said most of the decline was the result of a rise in sales of non-foreclosed homes; a backlog of bank-repossessed properties that have yet to be put on the market (resulting in a smaller pool of foreclosures for sale) also contributed to the drop.
