Home prices up, but sales down

MEYERS - With lagging sales and record prices, California homes may still be listed higher than what the market will bear in an industry that revolves around expectation.

The median price of an existing home in California increased 6.2 percent in June to $575,800 - a new record. But sales decreased 26.3 percent with the same period a year ago, the California Association of Realtors reported Tuesday.

"While home-price appreciation has slowed over the past few months, the median price continues to climb in most areas of the state and reached $575,800, a new record for California," CAR's President Vince Malta said.

The association's chief economist Leslie Appleton-Young discussed the real estate economy for the South Tahoe Association of Realtors meeting Tuesday at Lake Tahoe Golf Course. She included a forecast for the year. In 2006, the state's housing market is predicted to drop 16.8 percent in home sales compared to 2005. This is after three years of steady growth that reached a 13 percent high in 2002.

"What I can tell you is the market is good, not great, and looks a lot different than a few years ago," she said. "But what you need to note is this is a cyclical business. The economy is growing but not growing as fast as we thought it would."

And she also emphasized how tough it is to match the previous banner years for real estate - with mortgage rates at 50-year lows.

She stressed high energy costs as a major reason for a cooling real estate market, telling the Tahoe Daily Tribune that some local governments in California have responded with zoning changes that would accommodate mixed use so homeowners don't have to drive several miles from suburbia to buy commercial goods.

"It's a huge problem that's hit or miss. Some communities are doing it," she said, mentioning Los Angeles as one city.

Appleton-Young indicated other factors such as budget deficits, affordability constraints, lackluster job growth, weaker consumer spending and rising interest rates as contributing to the slowdown. And she expects the latter to continue to go up.

"I don't expect 9 percent interest rates," she said, recalling inflationary times that have kept the real estate market hot.

Moreover, the sellers have to change their market psychology to list their prices at a going rate to accommodate stubborn buyers.

"Clients are very impatient. The biggest question I get (from sellers) is: 'At what price should I be selling my home,'" Coldwell Banker real estate agent Monique McIntyre said. "The only houses selling are desperation sales."

Indeed, the median asking price for half the year was $569,000 in South Lake Tahoe. The median sales prices this June turned out to be $485,000.

And active residential listings last month almost doubled to 575 year to date. In 2005, they hovered at about 300, according to the South Tahoe Association of Realtors.

With a resort market like South Lake Tahoe, the slowing trend may eventually catch up with the rest of the state.

"Resort markets tend to lag behind," she told the Tribune.

Appleton-Young said she couldn't estimate when the sales prices would catch up to the listings. But she did say a "shake out" in the real estate business is anticipated with so many agents competing in a volatile market.

Statewide, the 10 cities and communities with highest median home prices in California during June 2006 were: Beverly Hills, $1.8 million; Burlingame, $1.7 million; Manhattan Beach, $1.5 million; Los Altos, $1.5 million; Newport Beach, $1.3 million; Saratoga, $1.3 million; Mill Valley, $1.2 million; Palos Verdes Estates, $1.2 million; Orinda, $1.2 million and La Canada Flintridge, $1.1 million.

The National Association of Realtors also reported in June the median price sold last month for $231,000, up almost 1 percent from the previous year. Sales dropped 1.3 percent on 6.62 million units.