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The median home price stays flat for the third straight month, easing fears of another housing bubble and signaling a return to a more normal market, experts say.

By Andrew Khouri
October 16, 2013, 4:54 p.m.

Southern California home buyers have apparently had their fill of bidding wars, home shortages and double-digit price hikes.

For the third straight month, the median home price across the Southland stayed essentially flat, at $382,000. The September data confirmed expert predictions that waning demand would throw a wet blanket over the white-hot market. The stall is owed to multiple factors: buyer fatigue over skyrocketing prices, higher mortgage rates, an expanding supply of homes and a pullback by investors who had swarmed the market.

The cooling has quelled fears of another housing bubble and signals a welcome return to normality, experts say. The California Assn. of Realtors predicts that year-over-year price increases will return to 6% next year, more in line with historical norms.

“The market was starting to get too hot for a lot of people to touch,” said Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate. “Now we are moving toward a more sustainable growth path.”

The rapid run-up in prices peaked in June — with a whopping 28% year-over-year increase in the median price. Sellers dominated the market, often getting multiple bids for more than the asking price amid heavy demand and scarce supply. But sellers listing their homes now are finding a different, more empowered, class of buyers.

“They don’t feel the need to pull the trigger if it’s not a perfect house,” said Broker Derek Oie, owner of Century 21 the Oie Group in the Inland Empire.

Nancy Taylor and her ex-husband placed their Chino Hills house on the market in August. They put in roughly $20,000 to spruce up the five-bedroom home, getting it ready for what they expected to be a mad rush, filled with “tons of people knocking on our door.”

Not so much. To sell the home, they had to cut their asking price and purchase a new stove top, dishwasher, microwave and oven for the eventual buyers, who closed this month — at a $20,000 discount off the asking price.

“It’s sticker shock,” said John Burns, a housing industry consultant in Irvine. “The market is stepping back and pausing for a moment and absorbing the new price increases and higher interest rates.”

Part of the slowdown is seasonal. Buyer demand tends to slow in the fall as some families are hesitant to move with children back in school and the holidays approaching. But experts believe that larger market forces account for much of the decline in demand.

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