Southern California home sales & prices rise in July
Demand for entry- and mid-level houses has led to bidding wars. But many foreclosures are still off the market.
Southern Californians are shopping for homes again, optimistic that values have been beaten down about as low as they will go and triggering the highest sales levels in more than two years.
An MDA DataQuick report shows a sharp rise in home purchases and an increase in median prices for a third straight month -- suggesting that the two-year decline in home values may finally be over.
In Los Angeles County, the median home price hit $321,000 last month, after lingering at $300,000 for most of the year. Orange County median home values rose to $420,000, up from a low of $370,000 in January.
Lower-priced homes are getting most of the action, with bidding wars for homes listed at $500,000 or less. The median Southland home sales price stood at $268,000, far below the 2007 peak of $505,000.
But the low prices are driving sales, which were up 19% last month over July 2008, according to figures released by MDA DataQuick.
Demand is heaviest for entry-level and mid-market homes because buyers such as David Soldinger, 27, think those prices won't go any lower.
Soldinger, an assistant to a film director, said he bid on 12 houses from Silver Lake to Sherman Oaks over the last eight months, losing every time -- often to people making all-cash offers. He said eight of the 12 houses had been foreclosed upon, and all were listed below $500,000.
The first house Soldinger went after, in Hollywood, got 26 offers in four days, he said.
"There was such a small inventory," said Soldinger, who rents a loft in downtown Los Angeles. "Any time something decent would come on [the market], you'd go to see it and there would be 12 people there in five minutes."
Soldinger said his offer -- under $450,000 -- was finally accepted this month for a three-bedroom house in Van Nuys.
Gerd-Ulf Krueger, principal economist for HousingEcon .com, a real estate consulting firm, said such fast and furious action is common for homes that won't require a "jumbo" loan of $417,000 or more.
"The big action is now in the low to mid-scale," Krueger said.
Listings of homes for sale "at least at the low and mid-level are pretty much empty. There's not a lot of supply," Krueger said. "The question is, to what degree the low supply has an artificial character."
Krueger was referring to a backlog in the foreclosure process that has reduced the inventory of homes for sale. Thousands of homes are in default but haven't been repossessed because of foreclosure moratoriums. Even homes that have been repossessed by lenders have been slow to be put on the market.
According to DataQuick, foreclosure sales are on the decline -- falling in July to 43% of home sales, down from a peak of 57% in February. But DataQuick analysts said that trend could reverse itself if the foreclosure logjam was broken and if unemployment worsened.
Because of that, DataQuick President John Walsh cautioned that declaring a housing market bottom "remains an especially risky call to make, given the uncertainty over the magnitude of future job losses and foreclosures."
The number of homes in the foreclosure process remains high. In July, nearly 125,000 homes in California were scheduled for foreclosure auctions, nearly double the number during the same month the previous year, according to ForeclosureRadar, an online seller of default data. The company said the increase in pending foreclosures was the result of lenders postponing repossessions.
That "shadow inventory" of homes is likely to be sold this year and next, which could again give mid-range buyers the upper hand in home purchases.
