11:30am | It seems bottom-feeders can be a good thing.
A real estate report on Southern California home sales issued on Wednesday shows that sales rose last month above the July and year-earlier level, “the result of seasonal forces, a relatively high number of business days this August and continued robust bottom-feeding.”
The region’s overall median sale price dropped below a year earlier for the sixth month in a row, real estate information service DataQuick reported.
A total of 19,654 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in August, up 8.6 percent from July and up 6 percent from August 2010, according DataQuick.
Last month’s sales count was 26.6 percent below the August average of 26,761 sales since 1988, but August was the first month since June 2010 to post a year-over-year gain in home sales, according to the report.
Last month was also the first since November 2009 in which all six counties in the region higher sales than a year earlier.
“Scratch beneath the surface and there’s not a lot to cheer about this month,” said John Walsh, DataQuick president. “Home sales were up from a year earlier but remained far below average. Many would-be buyers can’t find financing, and others who want to make a move now are stuck because they owe more than their homes are worth. Financial markets are increasingly choppy, the political outlook is incredibly murky and consumer confidence remains poor. Needless to say, it’s not an environment ripe for stabilizing the housing market.”
After reading the report, one Long Beach real estate agent cautioned that things won’t get better anytime soon, in Long Beach, the state or the nation.
“I’ve got to say that I am not surprised,” said Jeremy Colonna, a broker with Colonna & Co. Realty. “Mark Twain once said that there are three types of lies: Lies, damned lies and statistics. When you look at the affordability of housing and the impossibly low interest rates, it is easy to think that the market should be healthy.”
However, Colonna said that until the economy starts to give buyers, and lenders, some confidence, everyone will continue to be afraid to enter the water.
“Unfortunately, there is so much uncertainty in the economy that not only are homebuyers very cautious about entering into the marketplace, but the lenders are as well,” he said. “Underwriting standards have never been more stringent and the recent introduction of the Dodd-Frank financial reforms hasn’t made things any easier. Although I feel that local prices are either at or near bottom, I think the waters are going to be pretty muddy for the foreseeable future.”
The DataQuick report shows that the median price paid for all Southern California residential properties purchased last month was $279,000. That was down 1.4 percent from July and down 3.1 percent from August 2010. Last month’s median was the lowest since February, when it was $275,000.
The “bottom-feeder” boost to the market comes from the below-$300,000 segment, according to DatatQuick. Compared with a year earlier, August home sales fell in the upper price ranges but rose 10.2 percent in the below-$300,000 segment.
“Many of those sub-$300,000 deals were distressed properties, which accounted for more than half of the Southland resale market last month,” the DataQuick report states. “Just over one out of three homes resold last month was a foreclosure, while close to one in five was a short sale.”
In lower-cost neighborhoods, many buyers, investors in particular, continue to buy homes without a loan. In fact, Southland buyers paying cash accounted for 28.5 percent of total August home sales, according to DataQuick.
The already battered high-end market in Long Beach may face even more tough times ahead thanks to some changes coming from the Federal government, said Kym Elder with Coldwell Banker Coastal Alliance in Long Beach.
“I think the already volatile high-end market will be squeezed even harder when Fannie Mae and Freddie Mac cut the size of the loans they buy from lenders,” Elder said. “Beginning on Oct. 1 the (Federal Housing Authority) loan limit, which was increased to $729,750 in 2008 for higher cost market areas from $417,000, will be lowered down to $625,500. This will cause future borrowers looking in the higher end areas of Long Beach into finding more expensive and harder to get loans.”