Long Beach is a ‘seller’s market’ for homes
By Andrew Edwards, Press-Telegram
LONG BEACH >> When it comes to buying a house, Chad Clark’s timing could hardly have been better.
Clark, who lives with his wife and four children in the historic Craftsman Village neighborhood, purchased his home in 2009, when real estate prices were still depressed after the post-2007 housing bust. Clark paid about $350,000 for the house, which is now back on the market with an asking price of $489,000.
The Clarks’ property on Eighth Street is not just a single house, but a main house with a secondary home and a detached garage.
Four years ago, that configuration allowed the Clarks and their children to live in the main house while renting the other dwelling to tenants, but a growing family means the Clarks are considering new living arrangements.
“We bought this house with two kids and we have four now,” Clark said. “It was me sleeping in the back with two kids, and my wife sleeping in the front with two kids, and I want to sleep in the same bed with my wife.”
The Clarks, who want to stay in Long Beach, are doing their house hunting in a much different market from what they encountered in 2009. Home prices in Long Beach, and California overall, have been rebounding from the depressed levels seen during and after the Great Recession. Median prices are still well below their pre-recession peak. (The median price is the middle figure where half of homes sold for more and half for less.)
Those in the industry say the recent pace of appreciation is unlikely to be sustained through the coming year, but they have a sense of confidence that was hard to find during recent years.
“I would expect it to continue to be a strong market,” said Shannon Jones, the agent who put the Clarks’ home on the market. “I don’t think we’re going to see the dramatic price increases that we saw this year, but I would expect continued price appreciation.”
Jones’ assessment is in line with the California Association of Realtors’ 2014 forecast. The trade group presented its projections last month when members gathered for a convention in Long Beach. For California as a whole, the Realtors group expects median prices for this year to reach $408,600. That number would signify a 28 percent increase over last year’s prices.
For 2014, the Realtors group projects a more modest 6 percent increase to $432,800.
In Los Angeles County, median prices reached $447,130 last month, according to numbers released Tuesday by the California Association of Realtors. One year prior, the median price in the county was $364,810.
Current prices are still well below the pre-recession peak of $625,812 that was attained in September 2007, but also much higher than the low point of $248,851 reached in May 2009.
In Long Beach specifically, median sales prices hit $457,000 in September, a number that signifies a year-over-year increase of about 20 percent. The numbers, provided by Jones, are from the Pacific West Association of Realtors.
Recent market conditions, which Jones described as a “seller’s market,” may be the product of a relatively small quantity of homes on the market, low mortgage rates and a reduced proportion of foreclosures and other depressed homes among property sales.
Long Beach’s real estate professionals had only 2.2 months’ worth of homes to sell in September, according to Realtors data. A six- to seven-month supply is considered a normal amount to Realtors.
Meanwhile, the proportion of “distressed homes” — short sales and foreclosures — has fallen. For the entire state, nondistressed sales represented more than 85 percent of home sales in September, the most recent month for which data is available. That was the highest percentage in nearly six years, according to the Realtors group.
California mortgage rates averaged 4.08 percent as of Tuesday, according to Zillow Mortgage Marketplace. That’s below the recent peak of nearly 4.5 percent recorded in September.
The California Association of Realtors has projected rates will hit 5.3 percent next year. That could slow price appreciation as higher rates would make homes less affordable to some buyers, Long Beach-based broker Allison Van Wig said.
Van Wig said higher mortgage rates are likely to prevent dramatic price increases, but she doesn’t expect reduced affordability to stagnate the market. She said the prospect of deducting mortgage interest from one’s taxes will mean that home buying will likely be an attractive option for many households.