A rebounding housing market has led to an increase in tear-downs as wealthy buyers seek to build larger, opulent homes.

Southern California home prices posted a sizable pop in December, bucking a months-long cooling trend.The median sales price across the six-county region reached $395,000 last month, a 2.6% gain from November and 22.3% over the year, DataQuick said Tuesday. It was the first significant month-over-month increase since June, a rise the research firm attributed to fewer distressed sales and demand that has outstripped supply.

Sales tumbled 9.2% over the year and rose less than normal from November, evidence of the constrained inventory available for home seekers. Buyers scooped up 18,415 new and resale houses and condos last month, the lowest level in six years.

“Sales have fallen short of the same period a year earlier for three consecutive months now, and the pitifully low inventory is the main culprit," DataQuick President John Walsh said in a statement. "The jump in home values over the last year suggests we’ll eventually see a lot more people interested in selling their homes, which would help ease the inventory crunch."

The December data cap a whirlwind year for Southern California real estate.  Home prices rose swiftly though the first half of the year, as investors and families battled over a meager supply of homes for sale. Bidding wars proliferated amid record-low mortgage rates and some experts raised concerns a bubble could form.

The market cooled through the summer and beyond, a slowdown caused by waning demand amid affordability constraints and a typical seasonal pullback, experts said. Home listings also expanded in the summer in many markets, although inventory remained tight.

It's unclear if December's strong price gains foreshadow a renewed price surge and the spring home buying season will provide a better look into the market's health. Most experts predict tamer price appreciation this year than last, in part because of higher mortgages rates.

Investor activity continued to fall in December, although it remains elevated. Absentee buyers, mostly investors, purchased 26.2% of all homes sold last month — the lowest level since November 2011.

More homes also sold in mid-to-high cost neighborhoods, driving the median price up, DataQuick said. The median is influenced not only by a rise in values but also a change in the mix of homes selling at any moment; it is the point at which half the homes sold for more and half for less.

Last month, the number of homes that sold for $500,000 or more rose 11.9% from a year earlier. Sales of lower cost homes went the other direction, plunging as inventory in those neighborhoods remains tight. Many homeowners there owe more on their mortgage than their house is worth, limiting their ability to sell. Furthermore, investors have scooped up many homes in relatively affordable communities to flip or rent out.

Southern California home prices jumped in December, the first significant increase since June.

The median sale price in the six-county region hit $395,000 last month, a 2.6% gain from November and 22.3% over the same month a year earlier, research firm DataQuick reported Tuesday. The firm attributed the rise to fewer distressed sales and demand that has outstripped tight supply.

It's too soon to tell if the monthly increase signals the return of aggressive price appreciation. The spring home buying season will provide a better look into the market's health.

"The problem with one month of data is it could just be noise," said Richard Green, director of USC's Lusk Center for Real Estate.

But if the sharp gains continue through this year, it could renew concerns of a bubble.

"A pop from here would be a problem," Green said.

What's clear is that sales continue to decline, signaling a persistent shortage of homes. Buyers scooped up 18,415 new and resale houses and condos last month, the lowest level for December in six years. Sales tumbled 9.2% from December 2012.

"The pitifully low inventory is the main culprit," DataQuick President John Walsh said. "The jump in home values over the last year suggests we'll eventually see a lot more people interested in selling their homes, which would help ease the inventory crunch."

The December data cap a whirlwind year for Southern California real estate. Home prices rose swiftly through the first half of the year, as investors and families battled over a meager supply of homes.

The market then cooled through the summer and fall as higher prices and mortgage rates damped demand, and the market entered a typically slower period. Most experts predict prices will rise again this year, but at a measured pace. The spring home buying season will provide insight into whether those predictions will hold.

"This is the dead season. What happens in March matters," said Bill McBride, who writes the financial blog Calculated Risk.

Still, experts said the housing recovery continued to normalize. Sales of foreclosed homes and short sales have declined dramatically over the last year. Another positive sign is strong new home sales and housing starts nationally, McBride said.

In Southern California, new home sales rose 7.3% compared with December 2012. In pricey Orange County, new home sales more than doubled.

Homes in the typical move-up range — an important link in a healthy housing market — increased slightly. Sales of homes priced from $300,000 to $799,999 increased by nearly 2% last month compared with a year earlier.

The December increase in the median home price reflects, in part, more sales in costlier neighborhoods, according to DataQuick. The median is influenced not only by a general rise in values but also by a change in the mix of homes selling. The median is the point at which half the homes sold for more and half sold for less.

Meanwhile, sales of lower-cost homes plunged as inventory in those neighborhoods remains extremely tight. Many homeowners there still owe more on their mortgages than their houses are worth, limiting their ability to sell, and investors have scooped up many homes in affordable communities to flip or rent out.

As the housing recovery continues, Green said, it will be more robust along the coast, where the economic recovery is healthier — a disparity that has raised concerns among economists.
"The fundamentals of the Inland Empire are bad," Green said. "It's a very different economy than Playa Vista, Santa Monica or Huntington Beach."