South California July Home Prices Fall

Source : The Business Times, August 20, 2009

(SAN FRANCISCO) Southern California house and condominium prices fell 23 per cent last month from a year earlier as foreclosures dominated sales, MDA DataQuick said.

The median price dropped to US$268,000 from US$348,000 a year earlier, the San Diego-based research company said on Tuesday in a statement. The number of homes sold increased almost 19 per cent from a year earlier to 24,104 for Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties.

'There's still quite a bit of distress out there,' John Walsh, Dataquick's president, said in a statement. 'Even if we are at or near bottom, history suggests we could bounce along that bottom for quite a while.'

Foreclosures accounted for 43 per cent of sales, down from 45 per cent in June and from a peak of 57 per cent in February, MDA DataQuick said.

Foreclosures as a proportion of all sales hit the lowest since June 2008. Homes priced at US$500,000 and above were 20 per cent of transactions, compared with 15 per cent in March.

The July median price rose one per cent from June, the third consecutive monthly increase, according to MDA DataQuick. That was due in part to a larger share of home purchases financed with loans of more than US$417,000. About 15 per cent of transactions involved such loans, the highest in 11 months.

Values are likely to fall more in expensive coastal areas as employers cut jobs in the recession and homeowners reduce asking prices, said MDA Dataquick analyst Andrew LePage.

'Sellers are getting more realistic,' Mr LePage said in an interview. 'It looks like prices are coming down.'

Investors and absentee buyers, driven by discounts on foreclosed properties, bought 19 per cent of homes in the six-county region last month, up from 16 per cent a year earlier and more than the monthly average of 15 per cent since 2000, MDA DataQuick said.

The company defines absentee buyers as those whose property-tax bills are sent to a different address.

Purchases financed with loans backed by the Federal Housing Administration, often used by first-time buyers, accounted for 37 per cent of July home sales, up from 20 per cent a year earlier, MDA DataQuick said.

Prices fell in all six counties, led by a 39 per cent drop in San Bernardino to a median of US$140,000. The median fell 29 per cent to US$185,000 in Riverside; 20 per cent to US$321,000 in Los Angeles; 12 per cent to US$320,000 in San Diego; 11 per cent to US$375,000 in Ventura; and 9 per cent to US$420,000 in Orange.

The July median was 47 per cent below the market peak of US$505,000 in the spring and summer of 2007, MDA DataQuick said.

Sales increased in five counties, led by San Bernardino's 41 per cent gain. Sales rose 23 per cent in Los Angeles, 14 per cent in Riverside, 12 per cent in Orange and 11 per cent in San Diego. Sales fell 4 per cent in Ventura.

MDA Dataquick is a unit of Richmond, British Columbia-based MacDonald, Dettwiler & Associates Ltd, and compiles data from county property records to sell to public agencies, lenders and title companies. -- Bloomberg