Higher-end housing rally gains steam in Socal

Sales over $500,000 jumped 74 percent in January compared with a year earlier, says Dataquick, while sales over $800,000 rose 84.2 percent. Investors or second-home buyers made up 30.7 percent of sales. Cash purchases comprised more than a third of all dealmaking. That's high-end Socal real estate these days: Frenzied and expensive. It's not a terrific market for folks wanting to finance or deliberate for more than five minutes, which leaves out a good portion of potential homebuyers and raises concerns about how sustainable the price run-ups might be. Of course, many locations are still digging out of a huge hole, so it's way too early to talk bubbles. All told, January sales in Southern California were up 10.6 percent from a year earlier and the median price of $321,000 was up 23.5 percent. From Dataquick press release:

"Sharp price gains can attract speculation, which could lead to unsustainable, short-term gains in certain submarkets. A lot of today's housing demand is fueled not by spectacular job growth and soaring consumer confidence, but by super-low mortgage rates and unusually high levels of investor and cash purchases. Take away any one of those elements and it will matter," said John Walsh, DataQuick president. "For the overall market, price pressures should gradually ease as more homeowners react to rising values. This is the 'supply response' many analysts expect. The idea is that many who've held out for higher prices will be tempted to stick a for-sale sign in the front yard. Fewer will owe more than their homes are worth, enabling them to sell. Construction is already rising, and we could see lenders clear backlogs of distressed properties faster, adding to the supply."

JANUARY HOME SALES (% change from January 2012)
Los Angeles 5,308 +6.2%
Orange 2,431 +29.9%
Riverside 2,858 +6.5%
San Bernardino 2,137 +4.2%
Ventura 607 +8.2%

JANUARY MEDIAN PRICE (% change from December 2012)
Los Angeles $340,000 +17.6%
Orange $460,000 +17.3%
Riverside $226,000 +25.2%
San Bernardino +$177,500
Ventura $365,000 +13.2%

Source: DataQuick, DQNews.com

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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