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Prices bouncing back for California housing market

Julie Watson, Associated Press

SAN DIEGO (AP) -- California's home prices are bouncing back at a record pace.

The median price paid for a home in California last month soared to $352,000. That's up from $274,000 in June 2012 — a 28 percent increase and the biggest year-over-year jump since records began in the late 1980s, according to the latest figures from the real estate tracking firm DataQuick released Thursday.

San Diego-based DataQuick attributed the rise in prices across the state to disappearing distress sales, an improving economy and still low mortgage rates.

But many strapped homeowners — and investors — are still holding off, keeping inventory stubbornly low: Last month's sales statewide were about 17 percent below the average of 49,277 sales for all the months of May since 1988, when DataQuick's statistics begin.

"We're still bouncing off the bottom. This next part of the cycle should be fairly self-adjusting," said John Walsh, DataQuick president.

An estimated 41,027 new and resale houses and condos sold statewide last month. That was down about 7 percent from 44,087 in May, and down more than 3 percent from 42,513 sales in June 2012, according to DataQuick.

The drop is atypical for the California market, when housing sales tend to increase between those two months.

"As prices go up, more homes will come on the market. Price pressures will ease," Walsh said. "The only element we don't know much about right now is how much pent-up demand there really is out there."

June marked the 16th straight month in which the state's median sale price rose year-over-year.

The median home price in the nine-county San Francisco Bay Area reached $550,000 in June — the highest since December 2007. In Southern California, the median price surged to a five-year high, hitting $385,000. Of last month's sales, only 10 percent were properties that had been foreclosed on during the past year — the lowest level since August 2007. Short sales also dipped slightly.

San Diego relator Steve Seus said the shortage of homes for sale, especially in urban neighborhoods with their concentration of limited older homes, is feeding fierce bidding wars.

He recently sold a home in a central San Diego neighborhood in two days for $35,000 above asking price.

"The combination of low interest rates and still historically low prices certainly has attracted a lot of people," he said. "Literally, I had 175 people go through one home."

Bay Area home buyers are putting near record amounts of their own money into residential real estate, according to DataQuick. In June they paid a total of $2.3 billion out of their own pockets for down payments or cash purchases. That was down from May's all-time high of $2.6 billion, and up from $2.2 billion a year ago.

Real estate experts expect the escalation in prices to slow in coming months, especially if mortgage interest rates go up.

Abbey Boull't, 32, a mother of two, prays that happens, but she is also feeling the pressure to buy now or lose out.

Boull't and her family hoped to be able to buy their first home, but their lender told them they must wait for six months since her husband changed companies and needs more work history to qualify for a loan.

"If prices keep going up we might have to keep renting until we can save more," she said. "We're hoping this is just another bubble."

Andrew LePage, an analyst for DataQuick, said it's hard to know when the market is in a bubble, especially in the early stages.

"If the economy stays on track, interest rates don't spike too much, if not too many investors back out of the market, it's likely prices will continue to increase over the next year or two but at a slower pace," he said. "It's Economics 101: Prices go up. Supply increases. That should ease price pressures."