Low-Priced Foreclosed Home Listing Affects Home Prices

by Paul McCain on May 22, 2009

Southern California registered a 31.4 percent increase in its home sales last month compared with year-ago figures. However, the continuous decline of prices of properties at foreclosed home listing has also severely affected the overall housing market prices.

The six-county region of Southern California has an overall median home price of $247,000, a dropped of $3,000 from March price and 35.8 percent down from last year’s April level of $385,000. The county of San Bernardino suffered the most in the month-to-month home price decline, followed by counties of Riverside and Orange.

On a positive note, San Diego’s median home price of $290,000 reflected an increase of $5,000, while Los Angeles’ $300,000 remained unchanged.

Total home sales in Southern California reached 20,514, an increase from 19,486 last March and 15,615 from last year’s April level. With the exception of Ventura County, the region’s five counties experienced more home selling activity.

Meanwhile, San Diego County reported a 20.1 percent increase year-over-year to total sales of 3,375. Additionally, sales at foreclosed home listing involving properties that went through foreclosure proceedings since April last year, accounted for 53.6 percent of all sales generated in Southern California.

April figures represented the seventh consecutive month that post-foreclosure homes accounted for majority of properties resold in Southern California. However, San Diego home sales dropped by almost 47.3 percent, a significant decline from the 55 percent high of January.

According to DataQuick analysts, the home price trend reflects a slow market in high-priced houses. They also noted that since August of 2007, the area has not obtained any mortgage bigger than $417,000. Before August 2007, big mortgages represented about 40 percent of all loans obtained by homeowners in the area. Last April, big mortgages accounted for only 10.9 percent of all loans.

On the other hand, low-priced properties financed by loans insured by the Federal Housing Administration (FHA) represented almost 39.1 of the total home sales in April, an increase of 18.4 percent from the previous year.

John Walsh, president of DataQuick, said that overall market trends are showing price stabilization. However, the deteriorating job outlook and the possibility of a second round of foreclosures may stop stabilization from settling in at the housing market.

He explained that if the job market fails to improve in the coming months and foreclosed home listing continues to rise, whatever progress in the home sales front achieved in the past months would be all for nothing.

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