By Mark Huffman
ConsumerAffairs.com
March 17, 2009
Southern California, ground zero for the subprime mortgage meltdown, continues to show signs of a housing recovery. Home sales in the region rose 41.3 percent in February, from the same month in 2008, according to MDA DataQuick.
Driving sales was another steep decline in home sale prices, which fell 38.7 percent. Buyers moved in to snap up foreclosed homes and others whose property values had been dragged down by the markets collapse.
In fact, foreclosures accounted for more than half of February's existing home sale activity, according to the report.
A total of 15,231 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was essentially unchanged from 15,227 for January.
Sales have increased on a year-to-year basis since last July. February a year ago was the slowest February in DataQuick's statistics, which go back to 1988. The February average is 18,120.
"The market is so tilted away from normal mainstream activity that it's impossible to generalize or predict based on the atypical patterns we're seeing. That means that normal demand and supply is building up. The floodgates could open once mortgage credit starts to open up," said John Walsh, MDA DataQuick president.
The median price paid for a Southland home was $250,000 last month, the same as in January. That was down 38.7 percent from $408,000 for February a year ago. The median peaked at $505,000 in mid 2007.
In today's market, the drop in the median overstates the decline in home values, the report cautioned. The more affordable inland markets with most of the discounted foreclosures account for a large share of today's sales, while homes in the upper half of the market are not selling well, and are under-represented in the statistics.
When jumbo loans of more than $417,000 were readily available in early 2007, they accounted for just under 40 percent of all home purchases. Last month they accounted for just 10.3 percent.
At the same time, a common form of financing used by first-time home buyers in more affordable neighborhoods is near record levels. Government-insured, FHA mortgages made up about 38 percent of all purchase loans in February, up from 6.4 percent in February 2008.
