SAN DIEGO (AP) — California home prices surged to their highest level in more than five years last month as demand outpaced a thin supply of properties, a research firm reported Thursday.
The median price for new and existing houses and condominiums reached $340,000 in May, up 25.9 percent from $270,000 the same period last year. The median price rose by $16,000 during the month to its highest level since April 2008, when it was $354,000.
Prices posted a 15th straight annual increase in May as investors and cash-buyers competed for homes, keeping a lid on sales.
Sales increased 1.2 percent from last year to 42,293 homes, the strongest May sales tally since 2006. Still, sales weakened in many parts of the state, including a 14 percent decline in San Francisco.
The numbers provide the latest evidence that California housing prices are soaring amid low inventories. The median price for new and existing houses and condominiums in the San Francisco Bay Area hit $519,000, up 29.8 percent from $400,000 the same period last year to mark the 12th straight month of double-digit annual increases and seventh straight month of increases above 20 percent.
Yet some of the Bay Area's most populous counties posted flat or declining sales, with Alameda down 10.5 percent from last year, Santa Clara off 3.7 percent and Contra Costa up 0.1 percent. Overall there were 8,541 homes sold in the nine-county Bay Area, down 4 percent from last year.
Michael Lea, director of San Diego State University's Corky McMillin Center for Real Estate, said prices will stabilize as fewer people owe more than their homes are worth, positioning them to put their homes up for sale.
"I don't think we're in a bubble by any means because it's mostly the lack of inventory," Lea said. "Lending standards haven't loosened up."
At the end of March, 21.3 percent of California homes were in "negative equity" —meaning the outstanding loan balance exceeded the home's value — down from 25.2 percent three months earlier, according to CoreLogic.
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