“Soft Landing” continues in California Housing Market

Median price of a home in California at $551,300 in January, up 13.8 percent from year ago; sales decrease 24.1 percent
California Association of REALTORS® (C.A.R.)
The median price of an existing home in California in January increased 13.8 percent and sales decreased 24.1 percent compared with the same period a year ago, the California Association of REALTORS® (C.A.R.) reported today.

“We expected January sales to fall below the record that was set in January 2005. The decrease was intensified by interest rates crossing the key psychological threshold of 6 percent in the last quarter of the year, and by weakness in consumer confidence due to the residual effects of Hurricane Katrina,” said C.A.R. President Vince Malta. “However, interest rates remain near their historic lows, and we expect sales activity to accelerate as we move into the traditional selling season.”

Closed escrow sales of existing, single-family detached homes in California totaled 500,470 in January at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity decreased 24.1 percent from the 659,410 sales pace recorded in January 2005.

The statewide sales figure represents what the total number of homes sold during 2006 would be if sales maintained the January pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during January 2006 was $551,300, a 13.8 percent increase over the $484,580 median for January 2005, C.A.R. reported. The January 2006 median price increased 0.5 percent compared with December’s $548,640 median price.

“The California real estate market is beginning to experience the soft landing that we expect to be the underlying dynamic driving the housing market this year,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “The number of homes for sale has risen to a six-month supply, which will translate into a slower rate of price appreciation than we experienced in 2005.”

Highlights of C.A.R.’s resale housing figures for January 2006:

. C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in January 2006 was 6 months, compared with 3.2 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

. Thirty-year fixed mortgage interest rates averaged 6.15 percent during January 2006, compared with 5.71 percent in January 2005, according to Freddie Mac. Adjustable mortgage interest rates averaged 5.17 percent in January 2006 compared with 4.12 percent in January 2005.

. The median number of days it took to sell a single-family home was 48 days in January 2006, compared with 44 days (revised) for the same period a year ago.

Regional MLS sales and price information is contained in the tables that accompany this press release. Regional sales data are not adjusted to account for seasonal factors that can influence home sales. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of REALTORS® throughout the state. MLS median price and sales data for condominiums are based on a survey of more than 60 associations. The median price for both detached homes and condominiums represents closed escrow sales.

In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 93.2 percent or 355 of 381 cities and communities showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. (The top 10 lists are generated for incorporated cities with a minimum of 30 recorded sales in the month.)

Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices may be exaggerated due to compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through C.A.R. Online at http://www.car.org/index.php?id=MzU5NjU=.

. Statewide, the 10 cities and communities with the highest median home prices in California during January 2006 were: Los Altos, $1,700,000; Newport Beach, $1,501,000; Laguna Beach, $1,385,000; Burlingame, $1,200,000; Los Gatos, $1,075,000; Calabasas, $1,045,000; Santa Barbara, $1,027,500; Danville, $936,000; Dana Point, $875,000; Encinitas, $862,500.

. Statewide, the 10 cities and communities with the greatest median home price increases in January 2006 compared with the same period a year ago were: Sonoma, 78.2 percent; Atwater, 62.3 percent; Barstow, 59.1 percent; Sanger, 54 percent; Ridgecrest, 49.6 percent; Banning, 48.9 percent; Hesperia, 47.2 percent; Walnut, 46.9 percent; Lake Arrowhead, 45.9 percent; Upland, 45.1 percent.

Leading the Way...® in California real estate for more than 100 years, the California Association of REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 185,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.