The median home price in Southern California last month hit its highest point in nearly four years as buyers competed for fewer homes and committed to pricier abodes in more desirable neighborhoods.
The region's median home price hit $306,000 last month, according to real estate research firm DataQuick. That was a 2% increase from June and up 8.1% from July 2011. The median, which is the point at which half the homes in the region sold for more and half for less, has been up year over year for four consecutive months and month over month for six straight months.
Last month's median was the highest since $308,500 in September 2008, the same month that investment bank Lehman Bros. declared bankruptcy, pushing the U.S. financial system into crisis. Southern California's median home price peaked at $505,000 in July 2007, when troubles in the subprime mortgage market were beginning to spread to the broader financial system.
The increase last month indicates that housing is increasingly on solid footing, analysts said, and the spring and summer shopping seasons have been markedly better than they were in past years. The hope is that the gains will continue into the traditionally slower fall and winter seasons.
"There's growing evidence prices have crept up in areas where more demand has met a shrinking number of homes for sale," DataQuick President John Walsh said. "But we're approaching the peak of the traditional spring-summer home-buying season. Whether these trends hold into the fall and winter isn't clear."
Sales fell 6.7% from June, but were up 13.8% from July 2011. A total of 20,588 newly built and previously owned houses and condominiums sold in the six-county region.
The housing market has been marked by a shift away from a surge of investors and first-time purchasers buying lower-priced, inland-area homes. The market is now seeing more regular buyers and people looking to purchase properties in "move-up" neighborhoods.
The gains in Southern California have mirrored national trends, with various gauges of U.S. home prices notching improvements in recent weeks. The trend nationally appears to be the same as the local one: fewer foreclosures, historically low interest rates and a dearth of supply have caused buyers to pay more.
"Barring a significant slowdown in the U.S. economy, or other bad news on the international front, we fully anticipate the recovery in housing to continue, and really to further gather steam," said Stuart Gabriel, director of UCLA's Ziman Center for Real Estate. "There is a broad-based sense on the part of the home-buying public that housing has turned the corner."
One factor inhibiting the market is the number of homeowners still underwater, or owing more on their property than what it's worth. The sizable number of underwater borrowers both in the Southland and the U.S. has contributed to a reduction in inventory, because people in such negative-equity situations hang on for price improvements. If prices continue to climb, more people may begin putting those homes on the market, Gabriel said.
Housing economists, including Stan Humphries, chief economist for real estate website Zillow, have noted that the recovery will probably be bumpy rather than smooth, with prices increasing some months and dropping others as homes are added back on the market.
One major factor helping prices: Sales of foreclosed homes have sunk. Last month in Southern California, foreclosures accounted for 21% of the resale market, down from 24.4% in June and 32.6% in July 2011. They peaked at 56.7% in February 2009. The decline helps prices because foreclosures are often clustered in less desirable areas and typically sell for a discount.
The dearth of cheap homes on the market has meant that buyers looking to purchase an affordable starter home in Southern California are more likely to pay more than they would have last year.
Sales of higher-end homes are also increasing.
More discounted homes could be on the way, depending on whether a July uptick of homes entering the foreclosure process continues. But they were up sharply in the Inland Empire.
ForeclosureRadar showed that the number of default notices statewide was essentially flat compared with June, up 1.4% month over month and 12.3% from July 2011. But they were up sharply in the Inland Empire.
In San Bernardino County last month, notices of default were up 13.5% from June and 31.2% from July 2011. In Riverside County, default notices were up 0.7% from June and 21.7% from a year earlier.
In Los Angeles County, the number of default notices increased 3% month over month and 18.1% from July 2011.