Sustained uncertainty about the economy is cooling the real estate market,… (Mario Anzuoni, Reuters )
Home sales in Southern California fell to the lowest level for a July in four years as some key economic indicators turned downbeat and congressional budget wrangling took the country to the brink of financial default.
The median price was also down, falling 4% from a year earlier to $283,000, San Diego real estate information service DataQuick said. That's the fifth straight month of year-over-year decline.
The drop in sales from June was more pronounced, especially for houses that cost more than $500,000, as the job market sputtered, economic uncertainty intensified and some potential home buyers got cold feet, DataQuick said.
"The latest sales figures look a bit worse than they really are, given this July was a fairly short month, but they still suggest some potential home buyers got spooked," said DataQuick President John Walsh. "Reports on the economy became increasingly downbeat, and no doubt some people fretted over the possibility the country would default on its obligations."
A total of 18,090 new and previously owned houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in July. That was down 11.9% from June and down 4.5% from July 2010, according to DataQuick.
Prices also continued to slide. The median, the point at which half the homes sold for more and half for less, has declined year over year for the last five months. It has been unchanged or lower than a year earlier each month since December, when it posted a 0.3% annual increase.
"If there's a shred of good news in the data it's that last month's sales weren't much worse than a year earlier," Walsh said.
Sustained uncertainty about the economy is cooling the market, said Richard K. Green, director of the USC Lusk Center for Real Estate.
"The pace of this recovery is so anemic that it's hard to see how housing would have been good in July," Green said. "July is when all the budget nonsense was happening, and I can't think of anyone who wasn't a little freaked out by that."
Disconcerting news is giving buyers wobbly knees, he said. "Everybody knows people who have been laid off. When you know people, it's scary."
Southern California is still better off than other parts of the country such as Seattle and Florida, Green said, in part because builders here didn't go overboard putting up new homes in most of the region.
Los Angeles real estate agent Maryann Kuk of Housing Solutions Realty said individual buyers' confidence trumps the vagaries of the financial system.
"I don't think anybody who is seriously looking for a house is paying attention to the economy," she said. "They are paying attention to their own finances. If people are ready to buy, they will make it happen."
One challenge for buyers is a shortage of homes for sale in some markets, said Paul Kott, founder of Paul Kott Realtors Inc. in Anaheim. Potential sellers who are in a position to wait are holding their homes off the market.
"People are hopeful the market will come back," Kott said. "They think it will be higher than today, and quite frankly so do I."
For buyers, though, prices are down dramatically from the recent peak and interest rates remain low, Kott said. "It's a winning scenario for anyone buying their first home."