June 15, 2011 (Chris Moore)
If ever it is true that what goes up must come down, the Southern California housing market would be the prime example of that age old adage. The quick run up in housing prices during the boom years has led to a painful four year downslide for the southern half of the Golden State as year-over-year home sales and prices continued to drop in May according to industry specialists DataQuick.
Home sales in the Southern California region, which includes Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties, continued to be at three year lows in May as a total of 18,394 new and re-sale homes were sold for the month. That was down 17.4 percent from 22,270 homes sold in May 2010 and 29 percent below May’s historical average of 25,902 sold homes.
A total of 1,152 new homes were sold across the six counties last month, the least amount of new homes sold since 1988.
The median price for those homes dropped too. The median price paid for all new and re-sale homes in Southern California in May was $280,000, an 8.2 percent drop from May of 2010. The median price for a home in the area at the current housing cycle’s peak in mid-2007 was $505,000.
Housing prices also continued to be highly influenced by the number of distressed properties as they accounted for more than half of the re-sales market in May. Approximately one in three re-sale homes were a foreclosure, with about one in five being a short sale.
And despite that sinking feeling, all of the news wasn’t bad, as month-over-month data seems to indicate that the housing market for the region is stabilizing and may finally be hitting the bottom.
New and resale home sales were up 0.3 percent compared to April and the median home price for May was the same as it was for April.
But May’s dismal figures led John Walsh, DataQuick’s president to say, “A year ago we were talking about sales reaching a four-year high as buyers rushed to take advantage of expiring federal homebuyer tax credits. Now sales are stuck at a three-year low. The government stimulus is long gone and some of the fundamental drivers of housing demand have yet to strengthen enough to lift sales to even average levels. Some of the key culprits are weak job growth, tight credit and a hesitancy among potential buyers and sellers, who question whether this is the best time to make their move.”
Investors continued to play a significant role in the market as absentee buyers who paid cash purchased 24.6 percent of the homes sold in the area in May. Total cash purchases accounted for 29.1 percent of the home sold in May. Absentee buyers paid a median price of $210,000 for the homes they purchased.
There’s a lot more information available on DataQuicks website.
DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.
Tags: DataQuick, new homes, re-sale homes, median price, home sales, investors, absentee buyers, tight credit, weak job growth, government stimulus