April 1st, 2010 9:42 AM by Lehel S.
California's housing market has weathered some heavy hits during the current economic downturn.
But an unexpected rebound in the region's housing activity helped push a key home price index up for the eighth month in a row.
Standard & Poor's/Case-Shiller 20-city home price index reveals that prices rose 0.3 percent from December to January on a seasonally adjusted basis.
And Los Angeles and San Diego led the way.
Twelve cities in the index posted price gains. Los Angeles managed the biggest increase (1.8 percent), while San Diego showed a gain of 0.9 percent, according to the report which was released Tuesday.
Prices are now up nearly 4 percent from the bottom in May 2009, but still almost 30 percent below the May 2006 peak.
"While we continue to see improvement in the year-over-year data for all 20 cities, the rebound in housing prices seen last fall is fading," said David M. Blitzer, chairman of the index committee at Standard & Poors. "Fewer cities experienced month-to-month gains in January than in December 2009, on both a seasonally adjusted and unadjusted basis."
Eight of the 20 cities experienced price declines in January, including Atlanta (-0.5 percent), Charlotte (-0.1 percent), Chicago (-0.8 percent) and Portland (-0.5 percent).
Other cities with significant price gains included Phoenix (0.8 percent), Minneapolis and Cleveland (0.7 percent), San Francisco (0.6 percent) and Tampa (0.5
James Joseph, owner of Century 21 Ambassador and Coldwell Banker Ambassador in Whittier, said the housing downturn has forced many homeowners to move.
"If you you bought a house in an area like Hemet or Riverside at the peak ... those areas have been devastated," he said. "Many people have moved back to the infill areas."
Steve Johnson, director of the Riverside office of Metrostudy, a real estate information and consulting firm, said he's seeing that trend.
"Home values in the inland markets have been hit so hard that many people are not willing to sell," he said. "And we don't have a good mix of inventory for people looking to move, so they are returning to the coast and moving back to L.A. They've never seen prices this great in the basin."
Compared with January of last year, the 20-city index was off just 0.7 percent, at a reading of 146.32. That was the smallest decline in almost three years.
"We had our best March in about four or five years in terms of the number of transactions," Joseph said. "Buyers are definitely out and inventory is moving. I think we'll look back and say 2008 was the worst, 2009 was better and 2010 was a little better yet."
The Standard & Poor's/Case-Shiller doesn't include any actual home prices. But trends are readily apparent when looking at recent California Association of Realtors figures.
In February, California's median price was $279,840, up 14.1 percent from a year earlier. Los Angeles County's year-over-year gain was 6 percent.
Some local cities have also experienced strong annual price increases, including Alhambra (15.3 percent), Glendora (12.8 percent) and Monrovia (15.8 percent).
Kathleen Mueller, owner of Mueller Realty in San Gabriel, said the west San Gabriel Valley - including such cities as San Gabriel, Temple City, Arcadia and portions of Pasadena - has stabilized.
"We're seeing multiple offers," she said. "It's a very strong market with lots of demand."
Industry analysts say there are lots of foreclosure properties that banks have yet to release onto the market. But Joseph said lenders are increasingly looking to avoid that scenario.
"They are realizing that by foreclosing on a property they will lose 40 to 50 percent of the value of the home," he said. "But if they can renegotiate with borrowers through a loan modification or short sale they are actually better off."
Many analysts expect that the Case-Shiller number will eventually turn downward.
"It is only a matter of time before the index records a double-dip in prices," wrote Paul Dales, U.S. economist with Capital Economics, who forecasts a 5 percent drop. The market will be tested in the second half of the year, he wrote, when a tax credit that has boosted sales is gone.