Southland home sales at a new low
Low interest rates, falling prices and promises of government relief were not enough to slow the pace of Southern California’s housing downturn, which hit a new bottom last month.
Fewer than 10,000 homes were sold in the six-county region, DataQuick Information Systems said Wednesday. That’s the first time that has happened since DataQuick began keeping records in 1988.
What’s more, nearly 1 out of 4 homes sold -- 23% -- had been foreclosed, which is putting downward pressure on home values.
The median home price in January was $415,000, 18% below last year’s peak and the lowest since January 2005. The median is the point at which half the homes sold for more and half for less.
January is typically one of the slowest months for home sales, and real estate agents are hopeful that the perception of bargain prices will help lure buyers into the market as spring approaches.
Pamela Taylor, a 23-year-old accountant who lives with her parents, is just the kind of buyer whom home sellers are looking to attract. She has good credit and savings, and she thinks it’s a good time to buy.
Taylor said she made offers on three houses in West Hills in January and was outbid on two of them.
Her offer of $485,000 for a house listed at $515,000 was accepted, but she backed out of the deal when an inspection found a damaged foundation. Still, she plans to keep looking.
“The market’s going down, and as long as you can afford a down payment, you can get a monthly payment very similar to what you might pay in rent,” she said.
The scant sales activity that did occur in January tended to be at the low end of the market, the DataQuick report showed.
Of the 9,983 houses and condominiums sold in Los Angeles, Orange, Ventura, San Bernardino, Riverside and San Diego counties last month, the share bought with jumbo mortgages -- loans above $417,000 -- was 19%, half what it was a year earlier, DataQuick said.
That sales total was less than a quarter of the peak total of 40,156 in June 2005.
Sales of more-expensive homes could be aided by the economic stimulus package signed into law Wednesday by President Bush. That will temporarily enable mortgages of up to $729,750 to be offered as conforming loans, without the higher rates and standards of jumbo mortgages.
The Bush administration and an alliance of banks also announced this week an initiative to help delinquent borrowers keep their homes.
Along with those measures, repeated Federal Reserve interest rate cuts have brought mortgage rates to relatively low levels, and home prices have been falling for many months. Rates for 30-year, fixed-rate mortgages are now about 5.6%.
All these measures should provide some help to the housing market, said UCLA finance professor Stuart Gabriel.
The higher threshold for jumbo loans provides “a glimmer of hope” for the Southern California real estate market, where many buyers require mortgages greater than $417,000, he said. And lower interest rates might boost sales and prevent foreclosures by allowing some homeowners to refinance their mortgages to monthly payments they can afford, he added.
But Gabriel warned that the government stimulus plan was “not a magic bullet.” He ticked off a list of economic challenges faced by many Americans, including excessive credit card and automobile loan debt and a shaky job market.
“All of those factors enter into someone’s decision over the biggest purchase they’ll make in their life,” he said.
Even so, real estate agents in the Los Angeles area and Northern California are starting to report an uptick in traffic at open houses, said Leslie Appleton-Young, chief economist for the California Assn. of Realtors.
Few people were actually purchasing the houses they visited, though. “I don’t think February will see a dramatic change, but there might be a change in March,” she said.
“This is going to be a workout,” Appleton-Young said of the real estate market’s correction, “especially in areas with a lot of inventory.”
On Sunday, about 100 people turned out for one open house in upscale San Marino. At $800,000, the property -- a two-bedroom, one-bathroom home with termite damage -- has the distinction of being the lowest-priced house on the market in that San Gabriel Valley city.
Cathy Ude, the listing agent for the house, said she received three offers after the open house but declined to say whether they were above or below the asking price.
A similar-size house on the same street that had numerous updates and was in move-in condition sold for $960,000 in September.
Ude said she did not think her San Marino open house was representative of the overall housing market. It was a relatively low-priced house in a wealthy area with few properties on the market. “I’m sure it’s unique,” she said.
