Home Prices Rise Sharply in August

Home prices in Southern California’s largest counties grew robustly in August, as the cost of all types of housing from entry-level condos to luxury homes reached levels far above those of a year ago.

The median price, the point at which half the homes sell for more and half for less, jumped by 20% in Orange County and by 15% in Los Angeles County, DataQuick Information Systems Inc. reported Tuesday.

The Orange County median, at an all-time high of $370,000, represented the largest year-over-year increase since 1989. Los Angeles County’s median price hit $267,000, slightly below its record high in June.

Home sales dropped by 8% in Orange County and by 12% in Los Angeles County in August. But John Karevoll of DataQuick said those declines do not reflect a new trend because sales a year ago were unusually high.

“The real estate statistics we’re seeing right now are incredibly strong,” said Karevoll, the analyst who compiled the report for the La Jolla firm.

But some wonder how long the robust market will last. Prices have been growing at an unsustainable pace and the rate of increase is likely to slow, said Mark Boud, principal of Real Estate Economics, a consulting firm in Laguna Niguel.

“We think appreciation will slow,” Boud said, though he still believes the market is healthy.

Condominiums, typically a source of lower-priced housing, again showed the largest percentage gain last month, with the median rising 21% in Orange County and 20% in Los Angeles.

Prices have been boosted by a low supply of homes for sale, the lowest mortgage rates in generations and a rickety stock market that has prompted consumers to invest more in the perceived safe harbor of real estate.

The rising prices have caused many buyers to shift to adjustable-rate loans, which are easier to qualify for than fixed-rate loans, to buy expensive homes, some agents say.

And some homeowners are growing more inclined to sell as prices continue to climb.

“We’re definitely seeing more inventory, even though it’s not lasting very long,” said Ted Brass, an agent at Century 21 in Inglewood.

Nevertheless, some market observers say that even though there is a shortage of homes priced less than $300,000--which would ordinarily make the market move faster--the housing market is showing signs of slowing.

“Buyers are backing away from paying top dollar for inferior homes,” said Patrick Knapp, an agent at Remax in Irvine.

In addition, the flood of consumers refinancing their home loans to capture lower rates has overwhelmed lenders, appraisers and escrow and title companies, clogging the mortgage paperwork pipeline for new buyers. Many sales that would have occurred in August, Knapp said, will be posted this month.