Long Beach September Median Price

At $457,000 for both single family homes and condos, Long Beach compares favorably to warmer inland areas which have had rapid growth. This is an increase in median price of 14% over Sept. 2004. compared to the much greater increase in median price many areas. At 454 closed sales for the month, this is as much activity as some traditionally lower priced areas such as Palmdale, Moreno Valley and Murrieta, and more activity than any one city in Orange County for the same time period. See this California city chart.

The Place to Live in Southern California

There are plenty of luxury homes on the market right now, whether you’re looking for single family or condos with an ocean view. Prices over a $1,000,000 are not the target of many buyers, but if you’re from the Bay area, Santa Barbara or Carmel and need to relocate or looking for a second home, the opportunity is here in Long Beach. It’s hard to find another coastal location in California with as many residential neighborhoods that are very close to or border the shoreline which feature both older historic styles as well as newer luxury condos. Contact me for a customized list of properties currently available at ocean@surfside.net.

Reduced Tax Deductions?

Current suggestions to reform and simplify the tax code by the President's Advisory Panel on Tax Reform include elimination of deductions or possible increase in tax rates. These include reducing the mortgage interest deduction, reducing capital gains exclusion on principal residences, and eliminating deductions for the interest on home equity loans. At a time when, nationwide, housing costs have never been greater, and tax deductions never more significant, the path these suggestions take should be of a lot of concern to a lot of homeowners. To read the Panel's statement, click here.

L.A. County Median Price at $494,000

Home prices have increased more than 20 percent since this time last year in Los Angeles County. But, according to Dataquick, the median price declined in September by .02 percent for Southern California as a whole compared to August. Appreciation in San Diego County, for example, is far less than elsewhere. And adjusting for inflation, buyers' monthly payments are slightly below their 1989 level. Strong demand, however, continues to fuel the rate of selling and pricing in Southern California. See today's release for more.

Rates poised to rise through 2006

As rates rise, so does your monthly payment. The 30-year fixed could rise as predicted to 6.7 percent by the end of 2006, as energy prices change the inflation picture. First time buyers will feel the pinch first, as they look to 0% down and low down payment products. The non-traditional mortages will become more difficult to obtain as rates rise. This rise in interest rates is and has been abnormally low for the present business cycle, and is seen as a correction. So if you're looking at a national median price home of $219,400 (remember, I said "national", not "California"), with a 30-year mortgage at the current average of 5.98 percent, a home buyer would have to make monthly payments of $1,312. At a mortgage rate of 6.5 percent, that figure rises to $1,387 a month. See more about this here.

2006 California Market Forecast

C.A.R's current forecast for 2006:

"The rate of home price appreciation will moderate next year following four years of steep increases, while sales in 2006 will decline slightly from this year's record pace, according to the California Association of REALTORS® (C.A.R.) "2006 Housing Market Forecast". The forecast was presented during the C.A.R. Centennial REALTOR® EXPO running from Sept. 20 - 22 at the San Diego Convention Center.

"The median home price in California will increase 10 percent to $575,500 in 2006 (my NOTE: $568,000 is the current median price statewide) compared with a projected median of $523,150 this year, while sales for 2006 are projected to reach 630,610 units, falling 2 percent compared with 2005. The double-digit gain in the median price of a home, which California has experienced for most of the past five years, will again be fueled by the continuing shortage of housing across much of the state, according to C.A.R. economists. California typically gains nearly 250,000 new households, yet only will build about 200,000 new housing units this year, creating a shortfall of about 50,000 units.

"We expect the fixed mortgage interest rate to rise to 6.4 percent next year, and the adjustable rate to hit 5.1 percent, which will make it more difficult for many families in California to be able to afford a home," said C.A.R. President Jim Hamilton. "While still near their historic lows, up-ticks in interest rates coupled with the continued increase in the median home price will push affordability in California to a new all-time annual low of 15 percent next year.”

"The economic fundamentals at both the state and national level continue to support a strong housing market in the Golden State for the foreseeable future,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “However, we also expect that the wave of new loan products that have flooded the market over the past several years have injected a higher level of risk into the market, while affordability barriers to homeownership will continue to push residents inland and even out of state.

“Declining affordability will constrain sales in 2006 at a greater rate than we’ve previously experienced, especially in markets where there are higher price points compared with the state as a whole,” she said. “Not all areas of the state will continue to experience the unprecedented double-digit median price increases of the past five years. Some high-cost areas, especially those in the more costly coastal regions, face a potential leveling off of median price gains compared with the 10 percent gain we expect for the state as a whole.”

"Home sales for California in 2005 are expected to reach a record 643,480 units, surpassing the prior sales record of 624,740 set in 2004, according to C.A.R. economists."

Coastal Markets May Gradually Cool

Home-builder companies operate in 25 states, but half of their revenue is from California, Florida and Texas. While the demand for housing continues in California, long-term interest rate increases could lead to a leveling-off of prices in this and other markets resulting in a "decleration" in building production. The debate over the housing bubble and its demise has raged for some time, but Standard & Poor's has joined the circle of moderates on predictions of stabilization rather than crashes.

Rates Climbing Upward

"Freddie Mac reports a boost in the 30-year mortgage rate to its highest level in five months, as the benchmark bumped up to 5.91 percent from 5.8 percent over the past week. " REALTOR Magazine, 9/30/2005. Do not be surprised if this trend does follow through, as it's been threatening to do for sometime.

Another 2006 Forecast for So. Calif.

The Anderson Forecast (UCLA) has released today its latest picture of the local economy and real estate, and as elsewhere, it sees a slowing in market pricing, interpreted by some as the dreaded bubble. According to the Daily Bulletin, "It will happen with time and result in smaller rates of appreciation. But it probably won't be a repeat of the early 1990s, when the local economy took a blow from falling real estate prices and widespread job losses," and "The economists say that the real estate bubble won't deflate with the kind of whoosh that comes with a popping stock market bubble in which equity values suddenly plunge." The Forecast is not online as of this post, but click here for an article about it.

Six Mortgage Myths--or Facts

Depending on how long you stay in a home, a 30-year mortgage may not be the yardstick to use on which mortgage is best, so a five-year-fixed-to-adjustable could be appropriate and you could save money too. Try a lender second of 10% if you have only 10% to put down, you won't be paying PMI which is not tax deductible, you will be paying loan interest which IS tax deductible. Read Bankrate's article on more tips.