SoCal home sales surge amid foreclosures

AP News
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Posted: Oct 22, 2010 8:40 AM
SoCal home sales surge amid foreclosures

Southern California home sales surged to a 16-month high in July as prices kept falling and bargain-hunters snapped up foreclosed properties, a research firm said Monday.

A total of 20,329 homes and condos _ including new and existing models _ were sold during July in the six-county region, up 13.8 percent from July 2007 and up 16.7 percent from June, MDA DataQuick said.

It was the highest monthly tally since March 2007, when 21,856 homes were sold, and the first annual increase since September 2005, the firm said.

"What we're looking at is a fire sale of properties in newer affordable neighborhoods that were bought or refinanced near the price peak with lousy mortgages," said John Walsh, president of MDA DataQuick.

Sales were helped as the median price in the region dropped to $348,000 last month, down 31.1 percent from the market peak of $505,000 in July 2007 and down 2.2 percent from $355,000 in June.

Distress sales have yet to reach older, more expensive neighborhoods, Walsh said.

"It's too early to call it a turnaround, but it does indicate we're coming off the bottom," said MDA DataQuick analyst John Karevoll.

For nine of the previous10 months, sales were at the lowest levels for that month since MDA DataQuick began keeping statistics in 1988.

Michael Carney, a finance and real estate professor at California State Polytechnic University in Pomona, said it would be premature to declare a bottom to the market as long as foreclosures drive sales.

"The bottoming-out comes when people start buying homes, normal homes," he said. "We're all looking for good news and some kind of bottom, but I just don't see it."

July sales were briskest in less expensive, inland areas, especially involving homes built in the last seven or eight years, Karevoll said. Sales remained slow at prices above $450,000, he said.

Los Angeles was the only county to register a sales decline. Sales fell 3.2 percent to 6,592 homes, while prices plunged 26.9 percent to $400,000.

Foreclosures accounted for 43.6 percent of all resold properties in Southern California last month, up from 7.9 percent in July 2007 and a revised 41.8 percent in June. Foreclosures were at record highs and continue to be the dominant factor driving sales, MDA DataQuick said.

The trends were most evident in Riverside County, east of Los Angeles, one of Southern California's more affordable areas. Foreclosures accounted for 64.4 percent of sales of existing homes in the county last month. Sales of new and existing homes surged 48.6 percent from July 2007, while the median price fell 34.8 percent to $260,000.

Laura Flores, 27, became a first-time homeowner last month after paying $300,000 for a four-bedroom, foreclosed home in Ontario, east of Los Angeles, She had been living with her in-laws to save money.

Flores and her husband bid on the home the first day it hit the market, offering $10,000 above the asking price.

"It was the best one we had seen," she said. "All the others had no kitchens or bathrooms. Or the toilets were gone, or there were holes in the walls."

Doug Shepherd, who owns a Coldwell Banker office in Riverside with 40 brokers, said 90 percent of his sales last month were foreclosed homes, up from about half a year earlier. Most buyers were first-time homeowners.

"People can now afford the homes they couldn't have before," he said. "The houses are becoming affordable and interest rates are low. That's what's driving sales."

First Team Real Estate in Riverside sold about 40 homes in July, twice its total for July 2007, said branch manager Steve Orban. About two-thirds of sales last month were foreclosures or short sales _ when a house is sold for less than the amount owed on the mortgage _ compared to about 10 percent in July 2007.

The report covers sales in Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura counties.