L.A. County Home Prices Cool Off, Slightly, in July

Last month, for the first time in seven months, the pace of home-price appreciation in Los Angeles County finally slowed down.

The median price clocked in at $406,000, only a 23.8% increase from July 2003.

Only?

Well, it was the most sluggish rate of increase since December, when the median -- the point at which half of houses in the county sold for more, half for less -- was 23.7% higher than a year earlier. What’s more, the median was down nearly 2% in July from June, when it hit a record $414,000.

And to some, even the tiniest dip in a housing heat wave statistic spelled relief.

“The whole environment seems to be changing,” economist G.U. Krueger said Tuesday, “which is more conducive to a soft landing.”

There are varying definitions of soft, of course. The July numbers “may be an indication that the market is cooling a little bit,” said John Karevoll, chief analyst with DataQuick Information Systems, a La Jolla firm that compiles monthly housing statistics. “But when you say ‘cooling,’ it’s like the surface temperature of the sun cooling a notch.”

According to DataQuick, July was the 13th consecutive month that the median in Los Angeles County was up at least 20% year-over-year. It was also the fifth consecutive month that more than 10,000 sales were recorded, with 11,549 new and existing houses and condominiums closing escrow. Although that was down 3.2% from a year ago, the number of transactions was still among the highest for any month in the last 2 1/2 years and an indication that supply and demand are becoming more aligned.

This month, sales appear to be just as brisk. Dora Rivas, a Culver City real estate agent, normally takes her vacation during August. But she’s postponing it this year. The reason: There are 28 single-family homes on the market in Culver City, up compared with about 15 last August.

“July 31 typically marks the end of the season,” she said. “But this year, I’m busy. Sellers think it’s time to sell and buyer demand is still high.”

What’s happening this summer, said Patrick Veling, president of consulting firm Real Data Strategies in Brea, is that homeowners are “testing the waters” and listing their homes whether they are serious about selling or not. They watched earlier this year as their neighbors’ homes sold quickly for the asking price or more, he said, and figured it’s time to jump in.

That could be a reason that homes in Los Angeles County are sitting on the market longer now. The region’s housing inventory has doubled in the last 60 days to a six-week supply from a three-week supply, Veling said. Nonetheless, that’s historically low. When Southern California’s housing market hit bottom in the 1990s, there was a 19-month supply of homes for sale.

“Once unmotivated sellers realize they missed the top of the market, they will get out [of the market] and things will start getting back to normal,” Veling said. Right now “there are more sellers than buyers,” he said.

Still, demand remains strong. Despite the yearlong run-up in prices, mortgage rates hovering below 6% for a 30-year fixed-rate loan are allowing buyers to keep costs down and stay in the market.

Economist Krueger, who works for real estate investment firm IHP Capital Partners in Irvine, said he was less worried that the market was in danger of overheating because of the unabated pace of appreciation. He said he expected housing prices to start to slow to a “normal pace,” rising at rates of 5% to 6% a month and keeping the housing market -- and the local economy -- on solid footing.

“There was a danger that the home-price trends were based on exaggerated expectations,” Krueger said. “These frenzied appreciation numbers just weren’t sustainable.”

In July, the median price of a single-family house being resold rose 24.3% to $425,000 from July 2003, while the resale condo median jumped 27.9% to $330,000 and the median new-home price climbed 14% to $448,000. All categories were down slightly from June.

July housing data for Orange, Riverside, San Bernardino, Ventura and San Diego are expected to be released today.

In June, all regions but Orange County hit record median-price highs. Orange County’s median peaked in May.