Home Sales Jump up in July

Different views came up on the news that Southern California home sales jump in July, let’s see what the newspapers have to say:

Foreclosures fueled home sales in southern California in July to their highest level in more than a year, pushing the average price down by nearly a third, MDA DataQuick reported on Monday.

“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,” John Walsh, MDA DataQuick president, said in a statement.

Southern California was particularly hard hit by the deterioration of the housing market.

Home and condo sales in six counties, including Los Angeles and San Diego, rose 13.8 percent to 20,329, the highest since March 2007, while the average price was $348,000, down 2 percent from the previous month and 31.1 percent from a year earlier.

Southern California home sales rose last month for the first time in nearly three years, as steep discounts lured buyers back into a market where values have tumbled 31% over the last year.

Sales volume was up 13.8% overall from a year earlier, with Riverside County leading the way with a 48.6% jump, MDA DataQuick reported Monday. Los Angeles County was the exception, posting a 3.2% decline.

The rise is being driven in part by buyers like Andre and Jody Ocampo, who attended an auction of 250 foreclosed homes at the Riverside Convention Center on Sunday, looking for a bargain.

After just three minutes of bidding, they became buyers of a Lake Elsinore home — offering $385,000 for a house that had been appraised just a couple of years ago at nearly $700,000.

The Ocampos said they weren’t worried that prices would continue falling, as most real estate experts predict, because they plan to live in the home and not resell it for a quick profit.

Los Angeles County, the one exception to the trend, hasn’t been hit as hard by foreclosures and has relatively fewer discounted homes for sale. That’s probably why it saw a slight decline in sales instead of the increase seen in neighboring counties, said John Karevoll, MDA DataQuick’s chief analyst.

The median home price in Southern California last month fell 31.1% to $348,000 from $505,000 in July 2007, DataQuick said, the lowest level since February 2004, when the region was in the frenzy of the housing expansion. The decline ranged from 25.6% in San Diego County to 35.2% in San Bernardino County.

The market is also being weakened by “short sales,” in which homeowners price their homes for less than what they owe on their mortgages in hopes of avoiding foreclosure.

In addition, most lenders have tightened their standards, eliminating many potential home buyers who might have qualified for a loan during the boom.

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,” said John Walsh, president of MDA DataQuick.

For bargain hunters like Dale Smet of Santa Clarita, the timing is perfect.

Prices will stop falling, he said, when foreclosures stop increasing, existing home sales are strong and the unsold inventory gets far below its current level of 19,058.

While agents report overbidding on some foreclosure properties, Christopher Thornberg, a principal at Beacon Economics in Los Angeles, noted that interest is coming from “vulture funds” with millions of dollars to spend on distress sales.

“That process is not in any way, shape or form an indication of a return to stability; a healthier housing market,” he said.

Since the real estate bubble popped in late 2005, price declines have been particularly steep in lower-priced and newly built neighborhoods, where many owners used low-cost, sub-prime mortgages to buy.