Monthly Statistics – Single Family – March 2013

Monthly Statistics March 2013

Is California’s Wild Housing Market a Sign of a Bubble?

By Graham Wood | Posted Mar 28th 2013 8:00AM

California is the comeback kid of the housing recovery. Though home prices are making annual gains not seen since 2006, The Golden State sticks out as one where they are on a startlingly dramatic swing upward. California prices have posted double-digit hikes on a year-over-year basis for eight consecutive months. In other words, they’re rising fast — very fast.

And now California is sweeping the top cities where home list prices are rising the fastest. Six of the top seven cities — which all saw list prices jump more than 20 percent year-over-year in February — are in California, according to That’s great, but perhaps a little scary.

As some experts have been warning recently, housing conditions like California’s could be an early sign that we’re headed into another housing bubble. Buyers all over the state are getting into bidding wars, home prices are on a steep incline that some say is unsustainable, and open houses are once again attracting a frenzy of house hunters. This is what we saw in 2005 and 2006. So should California, despite all its encouraging news, be making us worried? Not necessarily.

“It’s important to put these increases [in home prices] into perspective,” said Errol Samuelson, president of “Despite these gains, home prices nationally in January were still 21.4 percent lower than they were at the peak of the housing boom in June 2006. In California, the losses were much worse. Homeowners lost more than half the value of their homes when prices fell. Today, California prices are still 34.8 percent below the peak level. California prices haven’t even recovered half of what was lost.”

There’s another reason today’s sharp increase in prices differs from the days of the housing bubble: There are real fundamentals behind them. It’s not pure speculation. Jed Kolko, Trulia’s chief economist, noted that solid job growth in California’s coastal areas are putting more buyers in the market, allowing sellers to raise prices because of demand. At the same time, housing inventory is lower than it has been in a decade, another element that typically drives prices higher. (But that should ease as more homeowners become confident about trying their hand at selling.) Plus, Samuelson added, government regulations are preventing another housing boom based on unqualified buyers being able to snag mortgages that they couldn’t afford in the first place.

So for now, what’s happening is just a strong recovery, not a bubble. Still, it is rather surprising how fast prices are bouncing back in California. Click through the gallery below to see the seven cities where list prices are rising the fastest.

Mortgage application volume dipped to end March

 Apr  3 2013  3:05PM
As March came to an end, mortgage application volume declined, which could be a result of the tight inventory in many markets.Homes for sale in West Hollywood are few and far between, which might have been part of the cause for the 4 percent drop in mortgage application volume during the week ending March 29.Despite the decline, applications for purchases were up slightly from a week earlier. However, the Refinance Index dropped 6 percent in the same period.

“Total purchase applications increased last week, due to an almost 7 percent increase in purchase applications for government loans,” said Mike Fratantoni, MBA’s vice president of research and economics. “This was likely driven by borrowers applying for loans prior to the scheduled increase in FHA premiums that took effect on April 1,”

Mortgage rates continued to hover around all-time lows during the week ending March 28, which could help application volume pick up in the coming weeks, according to Freddie Mac’s latest Primary Mortgage Market Survey.

As the spring buying season begins, more homes could be sold in West Hollywood, should interest rates remain affordable.