Posted by Joseph Y. Calhoun, III

Is the slide in home prices nearing an end?

Southern California’s median home price rose slightly in May for the first time in nearly two years. But the increase was more reflective of a change in the types of homes sold than an end to falling values, a real estate research firm reported Wednesday.

The $249,000 median price in May was up less than 1% from April’s $247,000 figure, and marked the fifth-straight month the median has held at roughly $250,000, according to San Diego-based MDA DataQuick.

The modest rise reflects increasing purchases at the high end of the housing market, where sales have been virtually frozen. For much of the last year, most home sales have occurred in the low end of the housing market, with banks unloading foreclosed properties at deep discounts, dragging the median price down.

Now, more expensive properties are selling, which raises the median, through a market paradox: many of those homes sold after owners cut prices to lure buyers. Still, stirring sales activity at the high end is a sign that the market is crawling toward equilibrium.

Okay, so the median price rose because more high end homes are selling, but that is good news. The high end of the market has been basically frozen in CA and other places because jumbo loans have been hard to come by. The psychology behind the story is interesting though. When prices were falling it was expected and no one felt a need to explain that the median was falling because high end homes weren’t selling. Now that they are rising again though the reporter feels a need to explain it away. Interesting…maybe the end is nigh for falling home prices.

One wonders too what effect that will have on sales. If you’ve been sitting on the sidelines waiting for prices to hit bottom this might be the motivation to enter the market. Of course that works both ways too; if prices start to rise, those who’ve been waiting for a better market to sell might also enter the market. It seems that, at least in SC, supply and demand are coming into balance.