Foreclosure Resales Increase in California
Foreclosure resales accounted for 34.2% of the resale market in Southern California in July, up from 32.8% in June, but down from 43.4% a year ago.
But Southland home sales saw their biggest year-over-year drop in more than two years in July as the market lost most of the boost from the federal homebuyer tax credits.
The median sale price dipped for the second month in a row, the result of a shaky economic recovery, continued uncertainty about jobs and the expiring tax breaks, according to MDA DataQuick of San Diego.
The median's peak-to-trough drop was also due to the shift in sales toward low-cost homes, especially foreclosures.
A total of 18,946 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in July. That was down 20.6% from 23,871 in June, and down 21.4% from 24,104 for July 2009.
"It appears some of the sales that normally would have occurred in July were instead tugged into June or even May as buyers tried to take advantage of the expiring tax credits. Some of last month's underlying technical numbers were largely flat, indicating that the market is treading water," said John Walsh, MDA DataQuick president.
"We do expect some sideways buying and selling to kick in, especially among homeowners who have owned for more than seven years and didn't take out equity during the frenzy. You may have to 'discount' your self-perceived home value, but if the person you're buying from has to do the same thing, it doesn't matter. And you may get a spectacularly low mortgage rate."
The median price paid for a Southland home was $295,000. That was down 1.7% from $300,000 in June, and up 10.1% from $268,000 for July 2009. The low point of the current cycle was $247,000 in April 2009, while the high point was $505,000 in mid 2007.
Government-insured FHA loans, a popular choice among first-time buyers, accounted for 36% of all mortgages used to purchase homes in July, down from 38.8% in June and 39.2% in July 2009.
In July, 21.9% of all sales were for $500,000 or more, compared with 21.6% in June and 19.2% a year ago. The low point for $500,000-plus sales was in February 2009, when 13.6% of sales crossed that threshold. Over the past decade, a monthly average of 25.4% of homes sold for $500,000 or more.
Absentee buyers—mostly investors and some second-home purchasers—bought 21.9% of the homes sold in July, paying a median of $220,000. Buyers who appeared to have paid all cash—meaning there was no indication that a corresponding purchase loan was recorded—accounted for 26.7% of July sales, paying a median $218,250.
The "flipping" of homes has trended higher over the past year. Last month the percentage of Southland homes flipped—bought and resold—within a six-month period was 3.7%, while in June it was 3.4% and a year ago it was 2%. Last month flipping varied from as little as 2.8% in Orange County to as much as 4.4% in Los Angeles County.