LOS ANGELES — The number of previously owned homes sold in California hit an all-time high in February, jumping 25.5 percent from a year earlier and lifting prices by a robust 19.8 percent.
Concern about rising interest rates and ongoing tight supply drove the median price of an existing, single-family home up to $289,550 during February, from $241,690 last year, the California Association of Realtors reported Monday.
The unprecedented strength of the housing market has kept the state out of a serious recession, but longer term the effects could stymie economic growth, said Leslie Appleton-Young, chief economist at CAR.
“Three to four years from now, it’s going to be difficult for the economy to continue to grow because of the lack of housing supply. I consider it a warning sign today,” she said.
Existing home sales reached a record 610,380 in February at a seasonally adjusted annualized rate. That represented a 4.5 percent increase from January. But as demand grew, the number of homes listed for sale declined 14 percent from a year earlier, Appleton-Young said.
Some buyers have been spurred into action by three straight weeks of interest rate hikes. The average interest rate on 30-year fixed-rate mortgages reached 7.14 percent last week, up from 7.08 percent the previous week, according to the giant mortgage investment firm Freddie Mac.
Many economists are forecasting that 30-year rates will go as high as 7.5 percent by the end of the year.
High prices and short supply are causing some aspiring home buyers to consider new ways to gain access to the market.
In San Francisco, renters have championed a proposal now before the Board of Supervisors that would ease the rules for tenants to buy their units from landlords.
Joe Capko, one of the lead advocates, said the law would dramatically increase home ownership in the city by making units available at prices significantly below market rates for condominiums. Current rules severely limit the number of apartments that can be converted into condos, which pushes up prices.
For many would-be buyers, the prospect of getting into the housing market can mean huge financial savings down the road.
Capko, a 38 year-old market researcher, said he and his family have spent $150,000 in rent over the last 10 years. But if he can buy his two-bedroom flat from his landlord for $230,000, he will boost his net worth by $1,800 a month through tax savings and property appreciation.
Median home prices increased in most parts of the state in February. Of 307 California cities and communities, 227 had higher prices than a year ago, CAR reported.
Areas seeing some of the biggest median price gains included La Verne (42.9 percent), San Gabriel (42.6 percent) and South Pasadena (41.8 percent). One of the largest price decreases occurred in Silicon Valley, which is still reeling from the technology bust. Prices dipped 5.4 percent in Santa Clara County, the region’s core.