Sales Still Sluggish But Worst May Be Over, Figures Indicate

Despite low interest rates and prices that have retreated to early 1989 levels, Southern California home sales continued at an anemic pace in May, according to an industry newsletter.

But a leveling off of foreclosure rates, solid condo prices and increased sales activity in several important home categories indicate that the worst of the price declines could over, the Southern California Real Estate Observer reported.

A total of 9,768 single-family resale homes were sold in Los Angeles, Ventura, Orange, Riverside, San Diego and San Bernardino counties in May. That was down 2.6% from 10,032 in April and down 9.8% from 10,831 in May, 1992.

The Observer gets its home sales information from La Jolla-based Dataquick Information Systems. The numbers include all so-called “arms-length” transactions. Sales to immediate family members and transfers of ownership to trusts are not counted.

The median price paid for a single-family resale house was $179,000 last month, down 1.1% from $181,000 the month before and down 5.3% from $189,000 in May, 1992, according to the Observer.

“Prices for entry-level houses have been relatively stable the past two years,” said Observer editor John Karevoll. “We’re seeing the price stability creep up into the mid-sized home category. Move-up houses are still coming down in price. And condo prices are at a record high, although that’s mostly because nicer condos are the ones selling these days.”

Foreclosure activity has pulled price levels down the past six months and will continue to do so for the rest of the year. But May was the second month in a row that foreclosure rates showed an annual decline.

“We’re not sure, though, if it’s because of fewer delinquencies or because lending institutions are being more accommodating with homeowners in distress,” Karevoll said.

Lenders started foreclosure proceedings on 6,201 Southern California homeowners in May, well off the March peak of 7,360 and fewer than the 6,513 for May last year. Because the formal foreclosure process can take six months or more, finalized foreclosures will increase for the next few months before tapering off, the newsletter reported.