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California housing market still sizzling

Demand for California houses and condos kept surging in June, driving sales volume and prices to record highs even as the annual rate of home appreciation declined in some areas, a real estate research firm said Tuesday.
/ Source: The Associated Press

In the 1980s, 1,000-square-foot houses in the fashionable city of West Hollywood were selling for $300,000, recalls real estate broker Rory Barish. Now, those homes are going for $1.8 million — and prices keep climbing.

In the San Francisco Bay area, the value of a typical house increased $99,000 in the past year alone.

Demand for California houses and condos kept surging in June, driving sales volume and prices to record highs even as the annual rate of home appreciation declined in some areas, the DataQuick Information Systems real estate research firm said Tuesday.

"Because there is no supply, the demand is great," said Barish, of Beverly Hills.

The median price paid for a home in California last month was $445,000, up 4.2 percent from $427,000 in May and 16.5 percent from $382,000 in June 2004, DataQuick found.

Homes have appreciated about 40 percent since 2002, when many economists and real estate market watchers began issuing warnings that the state's housing market was in danger of overheating.

But while the rate of appreciation has begun to ebb gradually in some markets over the past year, housing demand and favorable mortgage interest rates have driven prices higher and kept the market hot.

"We keep expecting it to start to taper off and it just keeps going along," said John Karevoll, a DataQuick analyst.

In the process, the average price of even a single-family home in many areas of the state has crept well beyond the half-million dollar mark.

Some 42.6 percent of the homes sold in California in June went for a half-million dollars or more, DataQuick said. Nearly 10 million people in the state live in areas where the median housing price exceeded $500,000; by comparison, the national median home price in May was $172,000.

Barish said that in most of the popular areas in Los Angeles County — where the median home price last month was $475,000 — buyers would be hard-pressed to find a single-family home for less than $500,000.

"You might be able to find something for $600,000. ... Maybe way out in North Hollywood or Woodland Hills," she said.

Last month, Orange joined the ranks of counties with a median home price above $600,000.

Ten counties — led by Marin and others in the San Francisco Bay area — had a median home price above $500,000 during the month, DataQuick said. The median price in Marin County jumped to $815,000 in June, an 18.1 percent increase over the year-ago period.

Demand and attractive mortgage rates helped push the median price for a single-family home in the nine San Francisco Bay area counties to a record $644,000 in June, up 18.2 percent from June 2004.

Sales of all dwellings in the region reached 13,014, the second-highest tally for any month since 1988, DataQuick said.

The typical mortgage payment that California home buyers committed to paying last month was $1,934, up from $1,899 in May, and up from $1,814 in June 2004. Adjusted for inflation, the June mortgage payment figure is about 6 percent below the 1989 peak.

June also set a record for the number of homes sold — 67,750 — up 21.5 percent from 55,750 in May and 1.3 percent from 66,850 in June 2004. DataQuick's records go back to 1988.

Home prices in June reversed what had been a gradual, five-month decline in price appreciation rates. But despite the home-buying fervor, many economists say they still expect the growth rate of home prices to slow through the rest of the year.

Some housing markets, like San Diego County, which took off in the early part of the decade, have seen appreciation rates slow to single digits. Others, like San Bernardino County, posted a 30 percent increase in June.

"Southern California is kind of nearing the end of a cycle there whereas the Bay area probably has a bit more gains ahead of it," Karevoll said.

Home prices in Alameda County vaulted by more than 20 percent between June 2004 and June 2005, according to DataQuick. The median for a standalone home was $620,000 last month. That was ahead of the region's lowest median of $448,000 in Solano County.