The housing market is sending a few positive signals — a welcome development, though not enough to conclude that a sustained recovery is yet at hand.
The latest reports from DataQuick show home prices across Southern California are recovering from last year’s depressed levels, as the drop in sales volume has leveled off. Double-digit gains in median prices are a welcome development — especially in areas such as Ventura County and North Santa Barbara County, where a foreclosure glut brought prices down to levels not seen in a decade.
But an analysis of the data shows just how far the market has fallen. For Ventura County, which peaked at a median price north of $500,000, the median price of $382,000 is still more than 25 percent below bubble levels. That median price is still about 12 percent above the median sale price reported last year.
There continue to be signs of weakness in a report that DataQuick’s John Walsh described as the market taking “baby steps” toward recovery. Cash buyers, including a large number of investors and absentee buyers, are still prevalent, and sales of million-dollar homes show scant sign of recovery.
It’s very hard to predict when more affluent communities such as the South Coast, Westlake Village and parts of San Luis Obispo County will see the kinds of volumes and price increases that indicate a full-blown recovery. That depends largely on the return of jumbo mortgage loans, and so far there are only a few players in that market.
But behind the latest report is a shift that bodes well for more affordable communities the tri-county region. According to DataQuick, the number of sales in hard-hit Inland Empire counties is beginning to level off, with some increases reported in coastal areas.
For Oxnard, Santa Maria and Paso Robles, the tilt toward affordable coastal communities is promising. There are a few indicators of a “new normal” environment for housing — sustainable prices, albeit at reduced levels, continued low financing costs and an orderly flow of buying and selling among qualified buyers.
If this trend continues through the current housing season, eventually excess inventories of new homes will begin to disappear — and that could be the beginning of a new housing construction cycle.