Southern California Home Prices Hit 4-Year High

Southern California home prices hit a four-year high in August as buyers snapped up more expensive properties along the coast and sales of foreclosed properties kept drying up, a research firm reported Thursday.

The median price for new and existing houses and condos in the six-county region reached $309,000 last month, up 10.8 percent from the same period last year, DataQuick said.

It was the fifth straight annual increase and marked the highest median home price in the region since it was $330,000 in August 2008.
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Shadow Inventory Not as Scary as It Looks

The housing market is improving because there are more buyers chasing fewer homes. Skeptics of a housing bottom, however, often point to a scary set of numbers: the “shadow inventory” of potential foreclosures—the millions of mortgages that are either in foreclosure or in default.

It’s true that home prices are unlikely to see brisk gains once they do hit bottom because it will take years to absorb this glut. But will this phantom inventory derail the incipient housing bottom? Maybe not, say a number of housing analysts.

There are several reasons why the shadow inventory isn’t as scary as it sounds: It’s concentrated in a handful of markets—it isn’t inherently a national phenomenon. It is being offset by improved demand, particularly from investors. And the housing vacancy rate is low, a product of very little new home construction over the past few years that could counterbalance continued high inventories of foreclosed homes.

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