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Home prices fall locally, nationally
By: CHRIS BAGLEY - Staff Writer | ∞
Home prices in Riverside County fell in April for the first time in a decade as buyers continued to gain market power from large numbers of unsold houses, a research firm reported Tuesday.
New and existing homes in the county sold for a median $409,000 last month, down 1 percent from April 2006, DataQuick Information Systems reported. Just 2,987 escrows closed, making April's pace barely half that of a year earlier and slower than any month in more than three years, according to DataQuick.
The research firm attributed the slower pace to stricter lending requirements that mortgage companies have begun to impose on riskier borrowers, a trend that DataQuick said may actually be buoying the median price it reports. The median is the level at which half the homes sell for more and half for less.
Real estate markets have slowed across Southern California for more than a year now, but the slowdown in Riverside and San Bernardino counties was significant, an economist said. That's because a relatively large number of borrowers with low credit scores have been flocking inland in search of less expensive houses, observers said.
Still, the stagnating market for entry-level houses and condominiums could affect the upper end of the market as sellers find themselves unable to cash out their home equity to spend it on more expensive houses, Chapman University economist Esmael Adibi said.
Riverside is the only county in Southern California whose median price has fallen since January; San Bernardino's median price remained unchanged at $370,000.
The situation in Southwest County is more dramatic. Median prices for resale houses fell from April 2006 in 11 of 12 local ZIP codes, according a separate report by DataQuick. Typical for the area was Temecula's 92592 ZIP code, whose median price fell nearly 8 percent to $454,500.
Just 409 escrows closed in the area, down 40 percent from the 685 that closed in April 2006, according to DataQuick. That trend is partly responsible for rising numbers of unsold houses in the area, real estate agents said in recent weeks.
The falling prices result largely from an unbalanced housing market, local and regional experts said.
"All of a sudden, you've got 10 properties and only one buyer roaming around out there," said Earl Bonawitz, who manages the Temecula office of Century 21 Wright, a real estate agency.
Bonawitz said many of his agents have been advising clients not to sell their houses only to lock in equity gains or move into a more expensive house locally. Unless a job change requires the move, it's probably not worth the time and expense, he said.
The local economy has been creating enough jobs to draw a steady trickle of buyers, though sellers can't necessarily get the prices they want, Bonawitz said.
"It's an issue of timing and pricing," he said. "You can price a house to sell today, or you can price a house to sell two years from today.
While Riverside County's real estate markets were especially strong in 2002 to 2004, that boom coincided with lesser booms across most of the country. Average mortgage rates fell from 8.5 percent in 2000 to less than 5.5 percent in 2003. Hundreds of thousands of homebuyers in search of the American dream pushed prices higher.
Thanks to a proliferation of financing arrangements such as no down payments and adjustable-rate loans with low introductory rates, home ownership came within the grasp of thousands more. But rates and monthly payments on many of those mortgages have recently begun to rise with market rates, driving thousands of borrowers into foreclosure.
The median price for existing houses in the U.S. fell 2 percent to $212,300 in the first three months in the year, the National Association of Realtors, an industry association, said Tuesday. It was the first year-over-year decline in two years.
Early last year, homebuilders were still breaking ground at a dizzying pace, expecting demand to ease only modestly. Since then, however, foreclosures have risen sharply, denting profits for mortgage companies who specialize in lending to subprime homebuyers, typically those with low credit scores. More than 50 subprime lenders have filed for bankruptcy protection or sought to be acquired since January 2006, according to a nationwide count by Bloomberg News.
The oversupply could take a couple of years to work through, Adibi said. Adibi expects median prices in Riverside and San Bernardino counties to fall by 6 percent this year from 2006.
Homebuilders have already slowed their pace and many are offering large incentives to sell off rows of empty houses. In the first three months of the year, for example, builders were paying referral fees to real estate agents at 88 tracts in Southwest County, compared to 29 tracts where they were offering such incentives in summer 2004, according to a quarterly tally by Kellie Tuer of Heritage Escrow in Temecula
"On the plus side, the economy of Riverside County is growing very rapidly," Adibi said. "Over the long term, people will still find Riverside and San Bernardino more affordable to move to."
-- Contact staff writer Chris Bagley at (951) 676-4315, Ext. 2615, or cbagley@californian.com. Comment at www.californian.com.
Median prices of single-family homes resold last month fell in 11 of 12 Southwest
County ZIP codes, while rising in just three.
Community ZIP Price 4/06 Price 4/07 Pct. Change
Lake Elsinore 92530 $381,000 $356,250 -6.5
Lake Elsinore 92532 $535,000 $497,500 -7
Murrieta/La Cresta 92562 $487,000 $515,000 5.7
Murrieta/FV 92563 $489,500 $485,000 -0.9
Menifee 92584 $423,000 $385,750 -8.8
Sun City 92585 $375,000 $365,000 -2.7
Sun City 92586 $250,000 $220,000 -12
Canyon Lake/QV 92587 $458,500 $437,500 -4.6
Temecula 92591 $452,000 $444,500 -1.7
Temecula 92592 $493,000 $454,500 -7.8
Wildomar 92595 $463,181 $412,500 -10.9
Winchester/FV 92596 $483,000 $428,000 -11.4
Riverside Co. $413,000 $409,000 -1
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jack wrote on May 16, 2007 6:01 AM:Bwahahahahahaha! Too many houses, not enough qualified buyers. Whose to blame? Look no farther than your local city council. Their election was paid for by developers and they approved every stucco box project they were told to. Now WE get to pay the price. SW Riverside County house prices are toast. Another 20% down by end of this year, and falling....
Hey Al wrote on May 16, 2007 7:36 AM:Stories like these "jawboning" the real estate market much like Alan Greenspan often did regarding the overall economy only perpetuate the problem. Yeah, we know the real estate market is slow. Enough already.
Is there anyone in SW County... wrote on May 16, 2007 10:54 AM:who can afford a house anywhere besides Teme-tucky or Murri-arkansas?
TemeTucky wrote on May 16, 2007 11:28 AM:Bwahhahahahaha! Now that's funny! Notice that Murrieta's fell not even one point in one ZIP but GAINED in another ZIP. Teme-tacky fell in both...big time. Nice place to visit but you wouldn't want to live there.
astute observer wrote on May 16, 2007 11:36 AM:Hey Al, it's not just the local city councils, but it is also the nefarious developers who compensate the council members under the table. The connections between the developers and the incumbents must be exposed. But don't look for the local press to do that. They are in the same boat.
Too late to move wrote on May 16, 2007 12:04 PM:Actually if you check home prices in let's say Southern Oregon, they've gone up, easily doubling in the last few years. Californians who bought up there can pay the mortgage, and are much happier with the friendly beautiful areas, GREAT schools and NO TAXES! Too late though as Oregon home prices are almost higher than here. Whoever made fun of Kentucky and Arkansas is probably jealous of the good life there too. You can still get a BIG brick home on an acre for $150K if you hurry. But of course, we can't sell our homes here cause the experts tell us not to. Weird.
Oside Resident wrote on May 16, 2007 12:15 PM:Murrietta, Temecula, all the same thing, hot and nasty. Wouldnt want to live in either place.
Reardon wrote on May 16, 2007 12:20 PM:A fall of 1% in the County real estate prices in a YEAR! THAT is called S_T_A_B_I_L_I_T_Y! The problem is much like the "Global Warming" of 1 degree in the past 50 years...crying "wolf!" where there is none. CHECK THE NUMBERS, and don't just read the headlines. Headlines are to sell newspapers, but the facts are in the numbers.
Too Late to Move - Duh wrote on May 16, 2007 1:41 PM:It's great - life, schools, everything - everywhere else but here, we know that already. Of course, schools are awesome in Oregon. At least where they aren't underfunded, anyway. You can get a big brick house on an acre for $150K in Kentucky because why? Oh yeah, because not that many people want to live there. (No disrespect to Kentuckians, intended, of course; just market 101.)
Bitter? wrote on May 16, 2007 2:13 PM:Most of you sound bitter. Especially you, Oside and temetucky. Sure stay where you are. You must like gang activity and graffiti. Have a nice day!
murrietta and temecula wrote on May 16, 2007 2:33 PM:have gangs and graffiti too....(and murders) haven't you read the paper lately???
no, we are not bitter wrote on May 16, 2007 2:42 PM:but just would much rather live in San Diego County than Riverside County any day. It is just plain ugly up there. I lived there for a short time and knew alot of people that moved there and wanted to get out but now are stuck. I was lucky and was able to sell my house right when the market was going down. I am much happier now that I am back in San Diego County. Sure, there is crime here, but there is crime there too. There are alot of low income folks moving out there because they can't afford to buy a house anywhere else. Now there are a ton of homes in foreclosure up there and that will only attract more low classers to move in.
todum2come wrote on May 16, 2007 5:11 PM:It amazes me when someone referes to another person as being low class or loosers due to size of thier mortgage and how many posessions or toys they have. I personally have family members who are worth in the tens of millions of dollars who are no happier than the next guy who barely has nothing. I am moving back to san diego county but I gotta say if there is any turn off to that area is it's that mentality. Stop looking at yourself in your pretty little mirror and stop looking around while driving in your car to see who might be looking at you. Your rediculous and paethetic.
not so smart jack wrote on May 16, 2007 6:09 PM: jack's comments are ridiculous. The city council is bought off by developers rhetoric is a tired old song sang by the same bunch of non-thinkers who can't seem to make the logical connection between population growth and market supply and demand. The market forces that have created this lull in the housing market have been well explained by economists and it has nothing to do with city councils being "bought off" by developers. I suppose jack lives in a tent.
face reality wrote on May 16, 2007 8:44 PM:Let's face it folks, we all saw it. House prices were rising too high and fast, primarily due to the great opportunities created by creative financing arrangements that enabled many first time and high risk buyers into the over-heated market...supply and demand. The mortgage agents collecting hefty commissions and lenders promising easy money were a big part of the insanity that drove the market that is now contributing to the shortage of "qualified" buyers. The lending agents took their money and ran...sorry but the the lenders and their "agents" deserve to get a taste of the bad times they helped create.
Median Man wrote on May 17, 2007 8:46 AM:Don't confuse medians with prices. The meddian says as much about the distribution of sales prices as it does about the relative price of a particular place. The credit tighting of suicide loans has taken a lot of the low end buyers out of the market, this skews the media higher.
market forces wrote on May 17, 2007 9:06 AM:The market forces of supply and demand are pushing prices lower because there is a two year supply of houses for sale, a huge number of which are currently vacant. Every town in America was promised the same thing by developers: "In the next ten years our population will double, and we need more houses." In fact, just the opposite has taken place. California has a net loss of population in the past decade. Why all the empty houses? Ask your ... councilmen.
Dave wrote on May 19, 2007 4:56 PM:The only segment of the population that is really growing in California is Latinos and, as a whole, they will not be able to afford any of the houses on the market without the prices falling by about half. When you factor in rising gas prices, it is obvious that the housing market in the IE is toast and will not see any real price increases (after inflation) for decades.
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