Median home prices decline

first_img AD Quality Auto 360p 720p 1080p Top articles1/5READ MORESanta Anita opens winter meet Saturday with loaded card160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! The median home price in Los Angeles County dropped in December and total sales are on the decline, pointing to a cooling housing market that has some worried about the economic impact. The median home price in Los Angeles County dropped from $575,310 in November to $552,760 in December, according to figures released Wednesday by the California Association of Realtors. But the December figure represents a significant increase when compared to the $463,450 median home price in December 2004. The median home price decline from month to month is typical in the fall, when there is less overall sales activity, said Leslie Appleton-Young, California Association of Realtors vice president and chief economist. More telling is the slowing of appreciation rates, she said. This slowing has been anticipated for years, but Appleton-Young said she doesn’t expect a housing market crash. “We’re already beginning to experience a soft landing where you’ve got properties on the market longer, a higher level of inventory and slower appreciation,” she said. “We were in a very aggressive, superheated market and they don’t last forever. I think it’s a bit of a relief more than anything.” The unsold inventory index in December 2005 was 3.6 months, compared with two months for the same period in 2004. The median number of days to sell home was 44 in November, compared to 40 days a year ago. Analysts are forecasting that sales of both existing and new homes will fall this year, perhaps by as much as 10 percent, reflecting the adverse impact of rising mortgage rates and buyer resistance to current price levels. Mark Zandi, chief economist at Moody’s, said he believed that about 1 percentage point of last year’s estimated economic growth of 3.5 percent was due to the strong housing market. Analysts said the economy could be in trouble this year unless other forces take up the slack. “We think that housing will go from being a source of strength for the economy over the past several years to a drag on the economy over the next couple of years,” said Andrew Tilton, a senior economist at Goldman Sachs. Significant cooling of the housing market could affect the California and U.S. economies, which have been supported by consumers spending and not saving money, said Michael Carney, professor of finance and real estate at Cal Poly Pomona. “People say a large factor behind consumer spending is people have a lot of equity in the their houses and they are cashing out their equity and spending money,” Carney said. “The idea goes if home prices stop going up or start falling, consumers will cut back on spending a whole lot, which would cause the U.S. and California economies to go into decline.” He doesn’t see significant signs of cooling, since prices are up almost 20 percent from a year ago. One indicator of a cooling housing market is if the more expensive homes fall in price, Carney said. California million-dollar home sales in 2005 surged to a new peak for the fourth year in a row, according to DataQuick Information Systems. One in 13 homes sold for more than $1 million in 2005, up from one in 20 homes in 2004. This increase attests to the appreciation of home prices. A home that sold for $700,000 five years ago now sells for $1 million, Appleton-Young said. The market is leveling off and some prices will drop, said Marty Rodriguez, owner of Century 21 Marty Rodriguez in Glendora. A home that needs work or that is on a busy street might see price reductions, she said, since a buyer has more choices and doesn’t have to take those homes anymore. but others won’t be affected. “The best quality listing is going to sell,” she said. The Associated Press contributed to this story. [email protected] (626) 962-8811, Ext. 2230last_img

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