California housing market bouncing back at record pace
BURBANK, Calif. (KABC) -- It's a "seller's market" in Southern California, and homeowners are cashing in. Home prices throughout the state are bouncing back at a record pace. People who want to make a move are quick to capitalize on an improving economy.
Movers are packing up Marta and Steve Hahn's Burbank home. They're moving into a home in San Diego and selling the current one for a profit. But just a year ago, they were on the verge of foreclosure.
"We got to the point where we ran out of finances and so we stopped paying, and that was the only point where we actually got the modification, then the banks would talk to us," said Steve.
Sellers across California have come upon the same good fortune in recent months as investors and cash buyers swoop in, and all kinds of buyers take advantage of low interest rates.
"We were underwater, and now we are above water," said Marta.
In Southern California, the median home price surged 28 percent in June. That's higher than any month in the past decade.
The median price paid for a home in California last month soared to $352,000. That's up from $274,000 in June 2012 -- a 28 percent increase and the biggest year-over-year jump since records began in the late 1980s, according to the latest figures from the real estate tracking firm DataQuick released Thursday.
An estimated 41,027 new and resale houses and condos sold statewide last month. That was down about 7 percent from 44,087 in May, and down more than 3 percent from 42,513 sales in June 2012, according to DataQuick.
But now the question is: Is this another bubble?
"Well for me, real estate is one of the bright spots in California's economy," said Jordan Levine, director of economic research at Beacon Economics.
Levine says unless interest rates shoot up, no, it's not a bubble. Because the increase in home prices, he says, is still in line with people's incomes.
"I see this as a sustainable trend," said Levine. "If we continue to maintain 25, 30 percent growth for the next several years, then I think we're in trouble, but I think as we come out the backside of the downturn, that this price growth that we're seeing is sustainable."
Realtor Candy Peak agrees.
"I would not call it a bubble," said Peak.
She predicts that some sellers will have to pull back on pricing, now that the interest rate has gone up, increasing a full percentage point in may alone. But, she says, they are still at historic lows.
"As long as interest rates stay lower, this is the new norm," said Peak. "However, if interest rates start edging up, then we could have a bubble effect."
For now, there are good deals to be had for buyers, but she says, sellers are getting the best deals of all.
The Associated Press contributed to this report.
economy, housing market, business, rudabeh shahbazi
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