Southern California's housing recovery surged last month as buyers scrambled for a short supply of homes.
The median price reached $368,000 for all homes sold in the six-county Southland — a 24.7% increase from the same month a year earlier and the highest price in five years. The number of sales, 23,034, hit the highest level for a May in seven years, real estate information provider DataQuick said Tuesday.
"We're deep into uncharted territory," DataQuick President John Walsh said, citing "razor-thin" inventory, pent-up demand, low interest rates and all-cash purchases by investors and wealthy individuals. "How this all plays out is educated guesswork at this point."
Home prices in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties all posted double-digit increases last month compared with May 2012. In Los Angeles, the median skyrocketed 30.2% to $410,000.
The price increases have raised concerns of another housing bubble, but prices remain far from the peak and experts say the market is likely to cool off as inventory expands. As prices rise, more homeowners and builders will list homes for sale. May's median price was 27.1% below a peak of $505,000 reached in spring and summer 2007.
"I think where we are right now we are still OK, but a year from now — another year like this — that is not OK," said Richard Green, director of USC's Lusk Center for Real Estate.
By late fall or early winter, the year-over-year price increases should ease as monthly numbers are compared with a period of more robust growth, Green said. Also, rising mortgage interest rates and a lack of strong wage growth should put the brakes on price hikes, he said.
"Ultimately, people don't have the income," Green said.
For now, buyers are continuing to compete fiercely for available homes. According to a report from Redfin, the online real estate brokerage, buyers faced competing bids on 86.1% of offers Redfin handled in Los Angeles, on 83.9% of offers in Orange County and on 72.6% in San Diego. Those percentages, however, represented declines in Orange County and San Diego from the previous month, while bidding wars in Los Angeles remained essentially flat.
Extremely low inventory and mortgage rates have ignited those bidding wars and helped turn the housing market into an economic bright spot — both in the Southland and nationwide. Investors have also played a major role in the recovery that began last year, buying run-down, lower-cost properties to fix up and rent out.
South Bay real estate agent David Keller said multiple offers are common, although he's slowly noticing a change.
"I do think it has slowed just a little bit, because it can only go so high before the people that have financing can't qualify," he said. "Or people say 'I need to take a break. This is kind of ridiculous.'"
But plenty of buyers are still waiting in line to buy homes, Keller said.
During a recent Sunday open house, about 20 groups of people strolled through a South Redondo Beach town home. The property sold quickly for $710,000, or $11,000 over the asking price, said Keller, the manager at the Manhattan Beach office of Re/Max Estate Properties.
"We had a deal by Tuesday or Wednesday," he said.
The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling as well as a general rise or fall in values. DataQuick said most of May's increase represents a general rise in value, while about a quarter of the increase came from a more expensive mix of homes being sold.
The number of homes sold between $300,000 and $800,000, the typical move-up range for the region, jumped 30.3% from last year. Homes that sold for $800,000 or more rose 46.7%. Meanwhile, homes selling for less than $300,000 declined, probably because investors flush with cash have already scooped up most low-end properties.
The home price increases have helped households rebuild wealth lost during the recession, enabling homeowners to once again start building equity while spurring builders to ramp up construction and add jobs.
But the price increases are also eating away at affordability. Only 44% of home buyers could reasonably afford an existing median-priced single family home in the state last quarter, the California Assn. of Realtors reported last month. That's a decline of four percentage points from the final three months of 2012.
Sales declined in Ventura, Riverside and San Bernardino counties in May, but increased in Orange, Los Angeles and San Diego counties, DataQuick reported.
The sales of distressed properties also continued to fall. Homes that had been foreclosed upon within the last year constituted 10.8% of resold homes in May, a decline from 26.9% a year earlier.
Investors continued to play a large role in May, although slightly less than a month earlier. Absentee buyers — mostly investors — purchased 29.5% of homes in May, down from 30.6% in April but up from 27.5% a year earlier.
Cash buyers made up 31.9% of home sales in May, a drop from 34.4% in April and 32.1% in May 2012.
Times staff writer Alejandro Lazo contributed to this report.