Firm: Sept. home sales in S. Calif. drop 16 pct.

AP News
Posted: Oct 19, 2010 5:13 PM
Firm: Sept. home sales in S. Calif. drop 16 pct.

Home sales in Southern California last month fell 16 percent from a year earlier to reach their lowest September level in three years, a tracking firm said Tuesday.

San Diego-based MDA DataQuick said the six-county region saw 18,091 sales last month, compared with 21,539 in September 2009, illustrating renewed concerns over the pace of the housing market's recovery. September's sales fell 2.4 percent from 18,541 in August, their third month-to-month decline in a row.

The firm noted that sales generally decline between August and September. The average decline between the two months has been 9.2 percent since 1988, when DataQuick's statistics begin.

"Today's market can be characterized as much by activity that's not happening as by the activity that is happening," DataQuick President John Walsh said. "We're seeing distress-selling, bargain-hunting and entry-level buying, while the rest of the market is still largely on hold."

The median home price in Southern California rose 7.5 percent last month to $295,500, from $275,000 in September 2009, DataQuick said. The increase was up from 4.7 percent in August, when the median saw its slimmest gain in a string of year-to-year increases that began in December.

Last month's month-to-month median price increase _ up 2.6 percent from $288,000 in August _ also represented an improvement over the July-to-August figures, when the median fell 2.4 percent.

But Richard Green, who directs the University of Southern California's Lusk Center for Real Estate, cautioned that the more upbeat numbers don't necessarily indicate a positive shift in the market, where prices remain depressed and sales sluggish.

"I think the price numbers are just noise right now," he said. "The prices are sort of bobbing along at the same place."

Foreclosures accounted for 33.4 percent of last month's sales, down from 34.5 percent in August and 40.4 percent a year ago.

September's sales dipped to a level not seen since 2007, when there were 12,455 transactions that month. Walsh predicted that buyers would return to the market when banks become more willing to lend.

Although mortgage rates have fallen to their lowest level in decades, it has become harder to qualify for a loan. Banks have been especially reluctant to extend "jumbo" loans _ generally defined as loans in excess of $417,000 _ to anyone without pristine credit and lots of cash in reserve.

"As many wait for this market uncertainty and turbulence to pass, demand is being generated and is accumulating," he said. "At some point, the mortgage spigot will be reopened and there will be a surge of buying activity."

But Green said the market is being most bogged down by slow sales of high-priced homes and buyers aren't necessarily going to begin snapping up such properties even if they have the credit lines to do so.

While the low rates make it a sound economic decision for some potential homeowners to exchange high rents for affordable mortgages, high-end homes are still seen as a stretch for many buyers in the weak economy.

"People don't need to buy a million dollar house," he said. "How many people are demanding houses at those price points? People may be uncomfortable committing to that amount of money."