2Q 2005 REAL ESTATE WRAP-UP - 39 QUARTERS OF REAL ESTATE APPRECIATION

For the eighth consecutive quarter, the Pacific states led the nation in annual house-price appreciation, growing at 19.2 percent from the first quarter of 2004 through the first quarter of 2005, according to Freddie Mac's Conventional Mortgage Home Price Index. Nationally, home values increased 11.8 percent on an annual basis, from the first quarter of 2004 through the first quarter of 2005.

California saw 23.44 percent price appreciation during that period.

In Santa Monica 134 single family home sold between January 1- June 30,  2005. According to the Multiple Listing Service, sales prices are currently averaging $1,794 per square foot, a 20% rise from June 2004. Volume is slowing, with 170 Homes were during the same period in 2004, 200 in 2003.

In the condo market, 279 condos sold between January 1- June 30, 2005. Condo sales prices  are currently averaging $680 per square foot, and prices are up more than 30% from June 2004. Again volume is down with 338 units were during the same period in 2004. 332 condos sold in 2003.

Properties are remaining on the market from 1-2 months and selling at asking price.

Santa Monica mirrors the rest of California. Statewide, prices continue to climb with a media priced home now averaging $509,230. Prices around the Southland crossed the half-million-dollar threshold for the first time in April, as affordability fell to 17 percent, according to the California Association of Realtors.

The minimum household income needed to purchase a median-priced home at $509,230 in California in April was $120,290, based on an average effective mortgage interest rate of 5.92 percent, assuming a 20 percent down payment, and assuming the monthly payment for principal, interest, taxes and insurance is no more than 30 percent of a household's income. April's minimum required income was up from $102,350 in April 2004, when the median price of a home was $452,680 and the prevailing interest rate was 5.42 percent.

"The first quarter of 2005 was the 39th consecutive quarter in which all nine regions of the United States had positive annual home price growth," noted Amy Crews Cutts, Freddie Mac deputy chief economist.
 
It has been estimated by the California Building Industry Association reported that the state’s housing boom has generated $1 trillion in increased home equity since 2000 and pumped billions of dollars into the state's economy.

Alan Nevin, California Building Industry Association observed that median equity gain for those who owned a single-family home in 2000 was $230,386, while the median equity gain was $200,544 for condominium owners. Homes in Los Angeles County have appreciated: $82.16 billion since 2000.

"For the person who owned a single-family home in the year 2000 and bought that home with a 15 percent down payment, their return on equity would be approaching 1,000 percent," Nevin said. "Economists and housing experts have known for years that home ownership is the leading source of wealth creation for the vast majority of Americans. Now we have a better feeling for just how much wealth home ownership has created here in California."

The California Building Industry Association study found that the 2.5 million homes purchased since 2000 have increased in value about $378.7 billion, while the 4.3 million homes owned but not sold in that time period have increased in value by $641 billion.

To burst that bubble, PMI Mortgage Insurance Co. notes that there is a 16.1 percent probability of an overall house-price decline over the next two years in the nation's 50 largest housing markets.

Boston, Mass. leads the list of bubble cities with a risk rating of  533; also predicted most likely for a house price decline is San Jose-Santa Clara at  530, San Francisco-Oakland at 479, and San Diego, Calif. at 433. Providence, R.I. at  397, rounds out the five most fragile markets on the risk index list. Los Angeles-Long Beach-Santa Ana clocked in on 359.