California's real estate market may be slowing down, but the median home price in Los Angeles County set another new record in March, climbing above the half million dollar mark and settling in at $506,000. That figure is more than twice the median price for the area just four years ago. That's good news for home sellers perhaps, but not-so-good news for folks who are looking to buy a home. An economist at the University of California recently said that if a homebuyer financed a house at the median price using conventional financing and putting down 20 percent (which would require some $112,000, excluding closing costs), the annual family income necessary to pay for the mortgage and taxes would need to be at least $120,000. The rising home prices in Los Angeles County have been offset somewhat by fewer sales, accompanied by few homes going on the market, which are both indicators that although the prices of homes may be rising, the overall market in the area appears to be slowing down. Nationwide, home prices have continued to rise, and people have been able to tap into their increased equity by taking out home-equity loans and lines of credit. In fact, nearly one third of all homeowners have already done that, according to a national survey conducted by the Gallup Organization. That same survey suggested that nearly half (43%) of the homeowners who tapped into their home equity used that money to improve their homes. The next most cited reason (30%) was for fun stuff like vacations, cars, and boats. Some 14% of the homeowners surveyed said they used their loans to consolidate debt, followed by paying for emergencies (4%), education (3%), and medical expenses (2%). As home prices continue to rise at double-digit rates in many areas of the country (or double in the past four years, as was the case in Los Angeles County), an Experian-Gallup Poll found that nearly two-thirds of all Americans (60%) expect prices to keep rising. On the other side of that coin, a large majority (85%) of homeowners said that it's not a good idea to take on any more debt in the current economy. Thats not good news for those who study things like consumer confidence. The bottom line: If you're looking for a home in LA, it may cost you twice as much as it would have four years ago, there are fewer homes to choose from, and you'd better have a good family income if you hope to continue to live in your home once you find it. Copyright 2006 Jeanette J. Fisher |
