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La Jolla, CA—Southern California home sales rose above the year-ago level for the seventh consecutive month in July despite continued declines in low-end distress sales. Increased activity in move-up and high-end submarkets also contributed to a significant rise in the region’s median sale price, which neared a four-year high, a real estate information service reported.
The median price paid for a home in the six-county Southland rose to $306,000 last month, up 2.0 percent from $300,000 in June and up 8.1 percent from $283,000 in July 2011, according to San Diego-based DataQuick.
July’s median was the highest since the median was $308,500 in September 2008. The median has risen month-to-month for six consecutive months and has increased year-over-year for the past four. July’s 8.1 percent annual gain was the highest for any month since July 2010, when the median rose 10.1 percent.
Greater demand, partially triggered by historically low mortgage rates, and a thinner inventory of homes for sale help explain recent gains in the median price. But the increases also stem from a sharp drop in foreclosure resales, which often sell at a steep discount and are concentrated in lower-cost areas, as well as a substantial increase in the portion of sales in mid- to high-end neighborhoods.
It appears that about half of the 8.1 percent year-over-year gain in July’s median sale price can be attributed to the shift in market mix. In July, price levels for the lowest-cost third of Southern California’s housing stock rose 4.9 percent year-over-year, while they rose 4.8 percent in the middle and dipped 0.8 percent in the top third.
“Even adjusting for changes in market mix, there’s growing evidence prices have crept up in areas where more demand has met a shrinking number of homes for sale. 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. If they do, then logically the number of homes on the market would eventually rise to meet the demand. More owners will be interested in selling, knowing their homes are likely to fetch a higher price, and more people will shift from a negative to at least a slightly positive equity position, enabling them to sell. Home builders could rev up operations and lenders could push more distressed properties onto the market sooner. It would tame any price appreciation,” said John Walsh, DataQuick president.
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