Southern California home prices are the same in July from June as more houses went on sale and interest rates rose.The median sales price in the six-county region was $385,000 last month, unchanged from June, DataQuick said Wednesday. The median is an amazing 25.8% higher than the same month of 2012.

Even though prices stayed the same, July home sales soared. Buyers purchased 25,419 new and resale houses and condos in July, 23.5% more than a year earlier and the strongest July since 2005. Sales were up 17.6% from June, when sales fell.

“July home sales came in very strong, and we think a lot of the increase in activity can be chalked up to a rising inventory of homes for sale,” DataQuick President John Walsh said in a statement. “The jump in mortgage rates a couple of months back might have spurred more buying, too.”

Homes prices have risen quickly this year because of low mortgage rates, an improving economy, tight inventory and heavy investor activity. The increases should moderate as the amount of inventory increases because of new construction, more owners put their homes on the market, and hedge funds back away. I believe that rising mortgage rates will also  cool the market as less people can afford the new higher payments both because of higher rates and higher prices.

“The market continues its re-balancing act, with more and more people who’ve been ‘underwater’ now able to sell their homes at a profit, or at least break even,” Walsh said. “As the mismatch between supply and demand eases, it will be more difficult for home prices to rise as steeply as we’ve seen over the past year.”

This is why i think investors have a much better chance of making money in the coming year. It’s been so tough to find deals but it’s going to abate. The market is slowly changing towards one that is more balanced and will be great for investing. Prices may not soar at the rate they did over the last year but they still have plenty upward motion.

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