Analysts are reporting a downturn in Southern California home sales, but the owner of a major Pasadena real estate firm says he isn’t losing any sleep over it.
Los Angeles County sales have tumbled by 8.5 percent below last year’s results, according to a report released Thursday by Irvine-based analytics company CoreLogic. The trend was most pronounced in Orange County, which saw a 10.9 percent drop in home sales. Ventura County sales dipped by only 1 percent.
“Home sales downshifted significantly this summer,” CoreLogic Analyst Andrew LePage said. “Sales during the June-through-August period … were the slowest for a summer in four years.”
Deasy/penner & partners President and Co-Managing director George Penner said he sees no cause for worry.
“There is no panic whatsoever,” he said. “We have a significant number of buyers who are looking for great properties, particularly in Pasadena. And quite frankly, Pasadena has always fared extremely well in many different markets.”
The market correction of 2008 and 2009 didn’t hit Pasadena nearly as hard as other areas in Southern California, according to Penner.
“We still are very optimistic about the real estate market. However, there’s been a slight uptick in interest rates,” he said.
“There’s still very, very little inventory to choose from,” Penner added. “Until inventory starts to pick up, it is going to remain not as robust as in the past.”
LePage similarly blames the downturn on a shortage of homes.
“Lack of affordable inventory is one of the main culprits of this summer’s slowdown,” he said. “Unlike the frenzied market of the mid-2000s, would-be homebuyers today don’t have access to the sort of risky subprime and other loans that fueled a lot of the home buying late in the last economic cycle.”
Meanwhile, the median home price in Southern California has crept upward, LePage said.
The report found the median home sale price in Los Angeles County grew 7 percent from $575,000 in August of last year to $615,000 in August of this year.
“The drop in affordability is the result of both price hikes and a significant rise in mortgage interest rates this year,” LePage said. “While the median sale price has risen 7.0 percent over the past year, the monthly mortgage payment on a median-priced home has jumped about 16 percent due to a nearly 0.7-percentage-point gain in mortgage rates over the same period.”
But real estate is a long-term investment, Penner said. “And if you look at the long-term appreciation of real estate, it’s one of the greatest assets ever created.”
“I think we’re in good shape and, as I said, we are very optimistic,” he said.