Foreclosures bump up Inland Empire home sales

There are no surprises in today’s latest report on Southland home sales by DataQuick Information Systems. The spring home-buying season was a dud.

The median Southern California home price plummeted 29.3% to $355,000 from a year ago, when the median price was at a near peak of $502,000. (The SoCal record price stands at $505,000 reached in the spring of 2007.)

Sales, meanwhile, fell 13.6% to 17,424 from last June.

But a couple of stats today stand out: In Riverside and San Bernardino counties, sales increased from a year ago, thanks to the flood of foreclosures that are seemingly being snapped up by bargain hunters. Of the 3,757 homes sold in Riverside County last month, two-thirds were foreclosure resales.

Times staff writer Peter Hong has more on the latest Southern California real estate market trends.

-- Posted by Times staff writer Annette Haddad

Comments? Questions? Email: annette.haddad@latimes.com

Photo credit: Nick Ut / Associated Press

Comments

[Cal]

So where is the massive surge in activity that Realtors kept telling people was happening back in the spring? This looks like the worst year on record so far.

Can realtors ("real estate experts") really not see the difference between slow winter months (in this case worst on record) and more active spring months, can realtors just no differentiate on seasonality and only see that things are better when they are in fact worse? The denial of reality is amazing.

Either prices stay high and transactions crawl or prices drop (and by a lot) and transaction go up. The transaction numbers are saying that prices haven't fallen enough to make houses a good buy. The only reason houses got so high was because of a credit bubble. That bubble has popped and the realtors are sitting wishing and hoping that the good times roll again.

I really can't imagine the people who are buying now, it makes zero sense. Just emotions overcoming logic or ignorance of market conditions (and certainly nobody helping them understand).

[It All Happens on the Margin]

It would be fantastic to find out how many of the IE sales involved walking from one property to "trade down" into another.

In that sense, the sales activity is not organic growth: it's musical chairs, only there are chairs added to the circle every time the music stops.

[mike]

does anybody here think that if you bought property now and held on to it for at least 10 years that it would still be worth the same or less? you also would have been investing istead of renting.

[Laker]

"...In that sense, the sales activity is not organic growth: it's musical chairs, only there are chairs added to the circle every time the music stops...."

That's a great logic for that area. The inventory is so huge over there, so much shadow inventory, and people are buying...
So many other knife catcher speculators...but many are probably just first time buyers that happen to find houses there that they can afford.
Bottom in that area is $50 per square foot. Do your calculations yourself.

[shockg]

does anybody here think that if you bought property now and held on to it for at least 10 years that it would still be worth the same or less? you also would have been investing istead of renting.

Posted by: mike | July 16, 2008 at 11:38 AM

Thats what these clowns want everyone to believe. All the while they can't wait to own a home. What hypocrits

[RichW]

"does anybody here think that if you bought property now and held on to it for at least 10 years that it would still be worth the same or less? you also would have been investing instead of renting."

Why don't you apply the same logic to troubled banks and start buying up their stocks ? I'm sure Downey & FirstFed would appreciate your investment. After all, foolish speculation got them to where they are today.

[E]

So if 2/3 of the sales were forclosures. How many homedebtors are "priced in forever"?

Lots more money on the table to be had for the patient homebuyer.

Lots of money on the table also for attractive Realtors(tm)...

table dancing that is.

[puckhead]

Cal,

I would buy a house right now if I can find a one that I like in the area that I want. If prices go down in the future then the price that I can get selling my house also goes down so it’s a wash. Selling and renting makes no sense to me because of the tax implications and kid considerations. I would gladly overpay for something in the right area that I like. Unfortunately, there are a lot of crap houses out there and the nice ones don’t last.

[It All Happens on the Margin]

Mike:

It just depends on the market you're buying into.

Here's the answer to your question.

http://www.nytimes.com/2007/04/10/
business/2007_BUYRENT_GRAPHIC.html

[dog-walker]

Mike:

Yeah. Absolutely. No question. In fact, it could take a good deal longer than ten years for your house "investment" to appreciate enough to keep pace with inflation. There's no possible argument that this CANNOT happen.

Are you saying it PROBABLY won't? Would you want to handicap that probability? Could you factor the problem of the "baby boom bust" into that handicap?

[Cal]

mike:"does anybody here think that if you bought property now and held on to it for at least 10 years that it would still be worth the same or less?"

Check wages, it isn't like wages for LA County are improving remarkably.

Check unemployment, it is rising rapidly.

Interest rates meanwhile are at historical lows. Any sales 10 years in the future is much more likely to be done in a higher rate enviroment, affecting purchasing power and sales price.

Up here in the SFV (I dont have localized stats for all areas) the median price took 11 years to recover in the last bubble in 1989. This bubble was much bigger.

No housing bull, especially shockg. Has yet come up with a scenario where if lending rationalizes (i.e. you have to have income to support the payment) how housing prices won't do the same.

This was a bubble, people need to get that through their heads first and foremost. Once they figure that out everything else follows logically from it.

mike:"you also would have been investing istead of renting. "

Right now ownership has a big premium over renting. Maybe you can explain to me just how you'd be investing if home prices even stayed steady over the next 10 years. You might want to do some homework and look at the total costs of ownership, it is very expensive. Outside of property tax, interest costs, maintenance, and insurance you have the costs of selling and buying. If you were 100% sure that you could sell a home for what you paid for it in 10 years unless the local rents were much higher than your total costs, you would be making a very expensive mistake.

shcokg:"All the while they can't wait to own a home."

Hardly, I can want to own a home and yet not buy because prices are too high. That isn't hypocrisy that is actually rational economic behavior. Of course you don't want rational behavior, you want people to make large economic mistakes because it benefits you.

[Laker]

shock, you are the hypocrite here.
I never said that i don't want to be home owner.
For you I will repeat.
IT IS GREAT TO BE A HOME OWNER and NOT A RENTER IFFFFFFFF You can buy the house at 2001 price or lower!
It is stupid to be a home owner if you buy at 2006 price today.

mike, if you bought your house in 1990 or 1991, After 10 years that is 2000 or 2001, it was worth same or LESS !! depends on the area and in nominal dollar. Inflation adjusted it only increased in value around 2002-2003

[Fourth Generation]

The change in value of the houses compared to last year's all time high is meaningless. After all those prices were hyper inflated due to the already known bubble. So, what is a fair price comparison? Or for that matter what is a real price for housing in SoCal? I would say that levels pre-bubble of 1998 would give us a pretty good estimate of the price of housing.

[mike]

JUST FOR YOUR INFO I WILL GO OUT ON A LIMB AND SHARE MY R/E PORTFOLIO with you
sherman oaks 91423/2000 square feet /purchased 2000 @$460.000..15 year loan at 4.75% $120.000 down
venice beach 90291/2200 sq. ft duplex. purchased 1998@ $485,000...15 year loan at 4.9%...$150,000 down
paso robles ca/2000 square feet/purchased 2005 @630,000/ 7 year fixed @6.8% then adjustable/$130,000 down
hermosa beach 90254/ 2 on a lot/2800 square feet and 800 square feet/$1,150,000 30 yr loan @6.8% $400,000 down
california city /2 acre lot $10,000 cash
this is where we have gotten by being tight wads and reinvesting in real estate and eating beans and rice and listening to tenants demand things which we would not give to ourselves. real estate is a good long term investment. we will never let go.
p.s. hermosa and paso robles have been hemmhoraging money ever since we bought them.

[Inland Empire]

I am in escrow on a house that I got for about 40% of what the value was at the peak. Its a nice house with lots of little extras and in a nice area. It took us a minimum of ten other houses/offers to get it. We got outbid on every other house over the last five or so months. Every other house we have looked at (looked, not necessarily bid on) is GONE. They have all been sold.
There are obviously people on this blog who think that people shouldn't be buying at this time. But plenty of people are buying and are happy about it. Finance should factor into a purchase but a home is also subjective. What I like may not appeal to you and vice versa.
This is not my first purchase - its my 15th over the course of about 30+ years.

[Paul]

Who cares what all these people think!! Eventually you will die and your next of kin will get it. Live life to the fullest. Buy the damn house already! Get the Beemer! Go to Europe! Enjoy life! You only have a problem if you can't repay your debt. Plain and simple. Don't make any financial decisions if it will cause you to go upside down. Otherwise, HAVE FUN. Keep it simple silly!!!

[imnodummy]

I bought a 3200 sqft home in Tuscany Hills, Lake Elsinore, CA, 5 years old, great condition that WAMU foreclosed on the $630,000 loan acquired in 2007. The owners never paid one dime on the loan and got it for nothing down. I got the house for $300,000 in a quick one day sale, not an auction. My loan is 5.75% for 30 years, 20% down. I can live with that, it was cheaper than I was paying in rent for a 900 sq ft condo in OC. Since I'm self-employed I can live and work anywhere and I gotta tell ya, its peaceful here and the people aren't rude like they are in OC. I made a good deal, its a home I am going to keep and at this rate it will be paid off in 15 years about the time I retire. Was it smart? You betcha.