Housing market still up

But analysts are predicting a cool-down. All Newport-Mesa communities except two saw rising prices, recent data show.Statistics released Thursday showed that home prices continued to climb around Newport-Mesa, but the question remains: How long can double-digit appreciation continue?

Figures compiled by La Jolla-based DataQuick Information Systems showed median home prices in most Newport-Mesa neighborhoods jumped by about 20% in October when compared with the same month last year. However, UC Irvine’s G. Christopher Davis cautioned that while he does not expect home prices to collapse, he predicts the market to level off during the year.

“You’d have to be a fool to say it could continue at that rate,” said Davis, the real estate management program director at UC Irvine’s Paul Merage School of Business.

By this time next year, Davis expects to home prices will be appreciating at a more measured 4% to 7% rate. A slowdown, Davis added, would be normal development in the local real estate market and would not qualify as a bursting bubble. Davis does not foresee a sudden increase in unemployment that he believes would be necessary for the market to fall apart.

Newport Beach Assn. of Realtors president Bob Chapman also sees a moderate price growth in the home market. In Chapman’s view, two factors that may causing the residential real estate scene to cool off are rising interest rates and growing hesitation among home buyers to spend big money and assume future appreciation will justify a hefty investment.

“Buyers are a little more cautious and not building in the prospect of appreciation in their offers,” Chapman said.

Interest rates have inched up throughout the year. On Jan. 6, the average rate for a 30-year fixed rate mortgage was 5.77%, according to mortgage investors at Freddie Mac. On Thursday, the rate for that kind of loan was up to 6.37%.

The average rate for a one-year adjustable rate mortgage was 4.1% on Jan. 6; Thursday, that figure was 5.2%.

Around Newport-Mesa, median home prices were up in all areas except for the ZIP Codes that include West Newport and Newport Coast. There, prices dropped by 13.7% and 10.1%, respectively.

Throughout Costa Mesa, October’s median home prices registered significant increases above October 2004 values. Fewer homes were sold in Costa Mesa in October 2005 than in October 2004.

First Team Real Estate agent Lori Robnett said the market tends to relax around autumn, and that sellers are often choosing to lower their asking prices by as much as $40,000 to $50,000 before making a deal.

“They’re sitting on ... [the houses] longer. Reduction, reduction, reduction,” Robnett said.

In September, the median price for home in south Costa Mesa was $786,000. In October, the median price in that area was $677,500. In north Costa Mesa, median home prices climbed from $693,500 to $695,000 over the same period. With prices so high, Robnett said the pool of prospective buyers has shrunk.

“You don’t see that many buyers in that price range,” she said.