Home prices still sky high
By Matthew Bunk
FAIRFIELD -- California home prices soared to new highs and sales reached near-record levels in June, as the state outpaced robust Solano County in both categories.
The median home price in the county rose 17.1 percent compared to a year ago, a significant rate of growth that nonetheless settled far behind a statewide increase of 25.3 percent, the California Association of Realtors said in its monthly report.
According to the report, the median price of a home in California was $469,170 in June, compared to $374,540 a year ago. Local statistics showed increases in 97.9 percent of cities and communities across the state.
In Solano County, the median price was $350,000, up from $299,000 a year ago.
But higher prices in the most expensive U.S. residential real estate market didn't scare away buyers, as statewide sales of single-family homes went up 10.8 percent. The total number of statewide home sales in June rose to 633,670 from 572,130 in June 2003.
It came close but didn't beat the monthly home sales record of 645,720 set in August 2003.
Fluctuating interest rates that rose briefly from historical lows and then went back down slightly may have scared potential home buyers into action, one expert said.
"The real estate market in June experienced the confluence of what is traditionally the peak selling season and consumers' responses to a changing interest rate climate," association President Ann Pettijohn said in a statement. "As mortgage rates began to increase, consumers' expectations of even higher rates in the future pushed many off the fence and into the market."
Rising prices make it difficult for low- to medium-income families to qualify for a home loan, but lower rates have been an incentive for those who can afford to buy to do so.
Thirty-year fixed mortgage rates averaged 6.29 percent in June, up from 5.23 percent a year ago, according to Freddie Mac. But rates dropped a bit since then, and on Friday the Freddie Mac Web site posted an average of 6.08 percent.
Uncertainties in the economy, terror concerns and the upcoming presidential election have tied lenders up in knots as they try to adjust their rates to fit consumer confidence. Just like the rates have gone up and down, home buyer sentiment has "bounced all over the place," depending more than ever on worldwide events, Prudential California broker Penny Robben said.
"People are concerned about what's going on across the world right now," Robben said. "I'm not sure how much effect terrorism has on people buying and selling homes, but it's a tenuous time for some people because it goes back to the economy in general."
Robben, however, doesn't see any signs of drastic change in a blistering statewide residential market. Home prices in many regions have increased 40-50 percent since 2001 - in some high-demand places it's gone up much more than that - but Robben said that's not necessarily cause for alarm.
"I'm sure some consumers out there have all kinds of it's-too-good-to-be-true kind of feelings, like the ceiling could be about to come down," she said. "But we're very optimistic. We don't have any real fears at this point."
Eight communities saw home values go up more than 50 percent in the past 12 months. Top-gainer Colton, a Los Angeles community, experienced an average price hike of 78.6 percent, according to association statistics.
Price growth was more moderate in Solano County cities, with Dixon leading the way at 24.2 percent. Vallejo was next at 19.5 percent; Suisun City was 15.7 percent; Vacaville and Fairfield tied at 15.3 percent; Benicia was 11 percent; and Rio Vista was 7.8 percent.
In Fairfield, the average rose to $346,000 from $300,000 a year ago.
Vacaville's average hit $362,000 from $314,000.
Benicia had the highest average, $449,750, and Rio Vista had the lowest, $304,000.
Reach Matthew Bunk at 425-4646 Ext. 267 or firstname.lastname@example.org.
Wednesday, August 04, 2004
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