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Newport-Mesa home prices stay hot

July 26, 2003

Paul Clinton

Rock-bottom interest rates drove home values higher in June, and

Costa Mesa and Newport Beach saw an at least 17% rise in the price of

a mid-level home, a trade group said Friday.

In its monthly report, the California Assn. of Realtors reported

that median home prices soared 29.9% in Newport Beach and 17.3% in

Costa Mesa in June. The group tracks sales of existing and new homes.

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In Newport Beach, the mid-level home rose to $862,750 from the

$663,750 it sold for a year ago. Costa Mesa's median home hit

$440,000 from the $375,000 of a year ago. Both were higher than the

median Orange County home, which rose 15.7% to $405,000.

"The median price of a home in Southern California continued to

post impressive gains in June," said Toby Bradley, the group's

president.

The strong local housing market reflected a broader nationwide

continuing strength in a housing market that hasn't shown any sign of

a slowdown.

Sales of new homes in the U.S. rose 4.7% in June to 1.16 million,

the Commerce Department said Friday. Each region of the country

showed an increase for the month. Existing home sales fell 0.3% to

5.83-million units.

The 30-year fixed mortgage during the month averaged 5.23% during

the month, compared to 6.65% a year ago, mortgage lender Freddie Mac

reported. Adjustable mortgage rates averaged 3.52%, compared to 4.65%

a year ago.

In July, however, long-term rates have begun to rise sharply.

During the four weeks ending Wednesday, the average 30-year fixed

mortgage rose from to 5.99% from 5.28%, Bankrate.com said.

At Impac Mortgage Holdings Inc., a Newport Beach-based real estate

investment trust that specializes in nonconforming residential

mortgages, adjustable rates have been more and more popular,

President Bill Ashmore said.

In the past few weeks, the company has seen a shift: Adjustable

rate loans have taken the lead over fixed-rate products, Ashmore

said. Also, almost 50% of the company's business has been

refinancing.

"What we have seen is that individuals are gravitating to

adjustable rate mortgages," Ashmore said. "There's still a strong

demand out there."

Ashmore forecasts a mere 1% to 1.5% increase in short-term rates,

at two years or less, over the next year. He said longer-term rates

should rise more sharply.

The average value of an Impac loan is slightly more than $211,000,

Ashmore said.

"This is a very good time to be a lender in California," he added.

* PAUL CLINTON covers the environment, business and politics. He

may be reached at (949) 764-4330 or by e-mail at

paul.clinton@latimes.com.

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