There were five distressed home sales — four foreclosures and one short sale — in La Cañada Flintridge in July for a total loss to investors of more than $1 million, according to recently released real estate data.
"These numbers are staggering," said Phyllis Harb, a longtime real estate agent in the San Gabriel and Crescenta-Cañada valleys.
In June, there was one distressed home sale in La Cañada. The latest figures bring the total number of distressed home sales to 24 for the year.
The five homes were bought between 2003 and 2005, during the real estate upswing. The devaluation of the market combined with additional debt from refinancing meant that by this year all were worth less than what was owed.
One home, in the 4900 block of Viro Road, appreciated in value by 7% since being bought for $750,000 in 2003. When it sold last month, for $803,000, there was about $1.1 million in debt riding on the property.
But while distressed sales accounted for 20% of La Cañada home sales for the month of July, foreclosure and short-sale rates in the city remain below those in neighboring communities. Distressed sales accounted for 28% of all home sales in Pasadena and Glendale last month.
"It sounds exciting, but the truth is most people who bought their homes in the peak of the market are down anywhere from 20 to 30 to even 40%," said real estate agent Keith Sorem. "The more expensive the home, the bigger the loss, and the reason is there are fewer buyers for those homes."
The average sales price in La Cañada last month was $1.1 million, with an average price per square foot of $466.53. The number of homes on the market remained low, with 3.2 months of inventory.
The city remains a highly desirable place to live, said Sorem, driven by its outstanding public schools and safe streets. Residents leave only if they absolutely have to, and there are many people hoping to move in, he added.
"The fact that La Cañada would have fewer distressed sales is a tribute to the environment," Sorem said. "It is a community that is somewhat insulated."
While he acknowledged the economy remains weak, Sorem said he is skeptical about predictions of a second wave of home devaluation and foreclosures. The real estate market has several mechanism in place that it didn't have two years ago to help people stay in their homes, he said.
"We have been told that there is going to be a wave of foreclosures," Sorem said. "That is what everybody thinks. If that were true, where is it? We have been waiting a year for this."