California Sees Home Sales Jump; REO Makes the Market
An estimated 29,458 new and resale houses and condos were sold in California last month -- off 22.1 percent from Dec. 2008, and up 53.9 percent from one year earlier, according to a report released last Thursday by MDA DataQuick. Sales volume in the Golden State has now increased on a year-over-year basis for the last seven months, the real estate information service said. But don't let that jump in volume fool you into thinking a recovery for housing is around the corner: median prices in California fell 10 percent between Dec. 2008 and Jan. 2009, to $224,000 -- the lowest since May 2001, and off 41.5 percent from one year earlier. The reason? Lower-end distressed properties are moving as investors begin looking for deals amidst some of the hardest-hit areas in the state. MDA DataQuick reported that half of the drop in median prices was due to shifts in the mix of homes being sold and how those homes were being financed. Of the existing homes sold last month, 60.4 percent had been foreclosed on in the prior 12 months. One year ago, it was 29.6 percent. In other words, REO continues to drive real estate trends throughout much of the California housing market. In California's nine-county Bay Area, the median price paid for all new and resale houses and condos fell to $300,000 last month, down 9.1 percent from $330,000 in December and down a record 45.5 percent from $550,000 in January 2008. In Southern California, the median price paid for all homes combined last month was $250,000, DataQuick reported, down 10.1 percent from $278,000 in December and down a record 39.8 percent from $415,000 in January 2008. Last month's median was the lowest since it was $242,000 in February 2002, and was a whopping 50.5 percent below the peak $505,000 median reached in spring and summer of 2007. "We've heard a lot of talk regarding the decline in home values about how 'no one wants to catch a falling knife.' But for months we've seen quite a flurry of sales activity in many inland areas where prices have fallen more in line with local incomes," said John Walsh, DataQuick president. "We can only assume," he continued, "that many first-time buyers, investors and others buying in these areas have concluded it's not worth trying to time the price bottom perfectly. They're happy to lock in substantial discounts relative to the peak. Whether the inland sales pace holds will hinge on factors such as the health of the job market, the availability and cost of financing, and the new efforts to stem foreclosures and halt price depreciation -- efforts that could eventually tame inland bargain hunting." Write to Paul Jackson at firstname.lastname@example.org.