'Fire Sales' Boost Southern California Home Sales
First, the good news: The number of Southern California homes sold last month edged up to its highest level in more than a year, as bargain hunters swept up foreclosure properties in affordable neighborhoods. A total of 20,329 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in California last month -- up 16.7 percent from the previous month, and 13.8 percent one year ago, according to San Diego-based MDA DataQuick. In fact, July's sales count was the highest since March 2007, although it was still below the 20-year average for the area; last month's total was the first since September 2005 to rise above the year-ago level, according to MDA DataQuick's stats. Last month's sales count was the highest since 21,856 homes were sold in March 2007, though it still fell 23 percent short of the average July sales total since 1988, when MDA DataQuick's statistics begin. From last September through June, sales for each month were at an all-time low for that particular calendar month, with the exception of April which was the next lowest. Last month's sales total was the first since September 2005 to rise above the year-ago level. But what drove buying activity -- and where that activity was located -- is something that should come as little consolation to the heavily battered housing markets throughout much of the Southern California region. Prices continued to fall sharply, dropping 2 percent between June and July, reaching a median of $348,000 statewide last month. "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. What we're still not seeing is this level of distress spreading to more expensive or established neighborhoods," said John Walsh, MDA DataQuick president. Foreclosure resales also continued to dominate the region, as well, accounting for a whopping 43.6 percent of all resales -- that was up from a revised 41.8 percent in June, and up from 7.9 percent in July 2007. In other words, what's selling are foreclosure resales in newer neighborhoods at a fire sale price; everything else is still sitting and losing value. If you're waiting for the bottom in Southern California real estate, don't hold your breath just yet. "There's no way in hell the house you buy now will be more expensive next year," said Los Angeles-based economist Christopher Thornberg, in an early August interview with the LA Times.