Home Sales Hot, Hot, Hot in Southern California
Southern California homes sold at a faster year-over-year pace in April, as first-time buyers and investors continued to target distressed inland properties, according to information from MDA DataQuick. April's jump in home sales marks the 10th consecutive month of increasing home sales in Southern California. A total of 20,514 new and resale houses and condos closed in the six-county Southland in April. That's up 5.2% from 19,506 in March and up 31.4% from 15,615 a year ago, according to the real estate information service. Foreclosure resales –- homes sold in April that had been foreclosed on in the prior 12 months –- accounted for a significant 53.6% of all Southland resales last month, marking the seventh consecutive month in which post-foreclosure properties made up more than half of all resales. The number of single-family houses that resold during the month was at near-record-high levels in many inland areas where nearby foreclosures have forced home values to fall -- places such as Palmdale, Lancaster, Moreno Valley, Perris, Indio, San Jacinto, Lake Elsinore and Victorville. New home builders are experiencing less favorable conditions, as deep discounts associated with foreclosures create stiff competition. Last month, builders sold the lowest number of newly constructed homes for April since 1988 -- 21 years! And more affluent neighborhoods, typically closer to the coast, where foreclosures and steep discounts are less common, are still feeling the pinch of the housing slump. Existing home sales in Beverly Hills, Malibu and Manhattan Beach remained at near-record-lows for April, according to DataQuick. The slow sales in high-end markets is likely attributed largely to the lack of credit available, particularly in the jumbo market. Before the credit crunch hit in August 2007, a whopping 40% of Southland sales were financed with jumbo loans, while only 10.9% were financed with jumbo loans in April. In the more affordable inland areas, first-time buyers seem to rely heavily on government-insured FHA financing. Such loans were used to finance 39.1% of all Southland home purchases last month, up from 18.4% a year ago. Absentee buyers, which includes investors, bought 18.6% of the areas homes sold last month. That’s up slightly from 17% a year ago and above the 15% monthly average since 2000. “In many markets we’ve seen signs you’d expect to see not long before prices would normally stabilize: robust investor and first-time-buyer activity, 10-plus months of year-over-year sales gains, and less price erosion, if any,” says John Walsh, MDA DataQuick president. “The problem,” he continues, “is that we still face two big threats to price stability: layoffs...and possibly a new round of foreclosures triggered by defaults on ‘option ARM’ and ‘stated income’loans used in mid-to high-end markets." Write to Kelly Curran.