Despite California home sales continuing at near-record pace in December and prices setting new highs, the state’s housing market will likely slow this year, according to real estate information service, DataQuick Information Systems.
Home sales in the San Francisco Bay Area finished out the year with the second-strongest December on record, with a total of 11,068 new and resale houses and condos sold in the nine-county region in December. That was up 1.6 percent from 10,897 in November, and down 2.5 percent from 11,354 for December last year, DataQuick reported.
The median price paid for a San Francisco Bay Area home was $533,000 last month, matching the record set in November. That was up 16.4 percent from $458,000 for December a year ago. Year-over-year price increases in the region have been in the 15 percent-18 percent range since April.
In Southern California, a total of 30,317 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in December. That was up 10.4 percent from November’s 27,459, and down 6.5 percent from 32,423 for December last year, according to DataQuick.
The median price paid for a Southern California home was $424,000 last month, another record. That was up 2.2 percent from $415,000 in November, and up 22.5 percent from $346,000 for December 2003. All months in 2004 had year-over-year price increases of more than 20 percent in the region.
“A year ago, we were more optimistic about 2004 than most of the housing forecasts. Still, we didn’t expect to see 2004 end as strongly as it did,” said DataQuick President Marshall Prentice. “Then again, most predictions were that mortgage interest rates would be higher at the end of the year, not lower. Certainly demand has remained stronger than anticipated.”
Prentice said he doesn’t think the state’s housing market can maintain strong sales and rapid price appreciation for much longer because “we’re closing in on the end stage” of the real estate cycle.
“The big question now is whether the cycle will play itself out in 2005 with a soft landing or with a turbulent crunch. Right now the soft landing scenario appears the most likely,” Prentice said.
DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.
What’s your opinion? Send your Letter to the Editor to firstname.lastname@example.org.