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Southern California home prices rise, though Inland numbers are less rosy

The article below paints a somewhat rosy picture, however, if you’ve seen the chart for Alt-A mortgage resets that are due, and have been paying attention to unemployment, then I suspect you might agree with me that the enthusiasm we’re seeing now will probably be somewhat short lived as things are going to undoubtedly get worse before they get better. The data-point that the press and CAR talk about most is the affordability index, which, as history has shown, does not indicate that prices are going to go up anytime soon. Take a look at the data for Notice of Default and ask yourself, where are all these properties going to go? My bet is that they are going to go into foreclosure and make the already bad unsold inventory numbers worse.

Your comments are always welcome,

TRD

By LESLIE BERKMAN
The Press-Enterprise

With foreclosures representing a smaller portion of home sales, median home prices in Southern California rose slightly in May, showing the first month-to month price increase since July 2007.

The one-month gain was not reflected in Inland Southern California, and analysts hesitated to say prices wouldn’t fall further. In Riverside County the median home price — where half sold for more and half for less — was unchanged from April at $180,000, while in San Bernardino County the median price slid by $1,500, from $138,500 in April to $137,000.

More sales of expensive homes in coastal counties and fewer sales of cut-priced foreclosures in the Inland counties caused the price elevation in Southern California, according to MDA DataQuick, which on Wednesday released its May housing report.

DataQuick spokesman Andrew LePage said it is uncertain whether the leveling of home prices means they have hit a solid bottom. The median home price has dropped more than 45 percent in San Bernardino County and nearly 38 percent in Riverside County in the past year.

“It is still a pretty nasty recession, and we know more foreclosures are coming, but we just don’t know how many,” said LePage. “The uncertainty over foreclosures and the depth of job losses makes it very tricky to call a bottom right now.”

Chapman University Economist Esmael Adibi said the most promising trend is a surge in sales, as first-time home buyers and investors have jumped in to buy bargains. Home sales were 28 percent higher last month in Riverside County than in May 2008 and 51 percent higher in San Bernardino County than a year earlier.

“Sales are reducing the inventory and laying down a foundation for prices to go up,” said Adibi. He predicted that if the job market improves as he anticipates, in a year the Inland counties will see median home prices that are higher than today’s.

Sue Acker-Bare, an agent with Century 21 Showcase in Highland, said she has seen first-time buyers drawn into the market by a $8,000 federal tax credit and low home prices. Also an increase in interest rates — from about 4.5 percent a month ago on a fixed-rate conforming loan to nearly 5.9 percent Wednesday — has convinced some not to wait any longer, she said.

“I think it is a good time,” said Mayra Gomez, 24, who with her husband and two children moved a week ago into a three-bedroom house on a golf course that they bought from a bank for $254,000 in Riverside.

Gomez said they’re overjoyed to buy a house with a Federal Housing Administration loan that required only a 3.5 percent down payment. When they first went house-hunting 18 months ago, she said, lenders wanted 20 percent down, and houses cost a lot more.

Real estate agents say because the number of foreclosed properties on the market has declined substantially this year, buyers are forced to bid against one another for what is available, with successful offers frequently above list price.

“Just about every property now has multiple offers. The market is looking more and more like a sellers’ market,” said Mike Teer, broker-owner of Teer One Properties in Riverside

Ed Leamer, director of UCLA’s quarterly Anderson Forecast, said an unknown is the impact of mortgages that were extended often without income documentation and with alternative payment plans to home buyers and homeowners who refinanced a few years ago. These mortgages are scheduled to reset to higher monthly payments in coming months.

Homeowners with such mortgages may not be able to refinance because of lower property values and could decide to let their homes go to foreclosure, said Leamer.

Leamer said he believes the number of such mortgages that fail will be fewer than the subprime mortgage failures that fueled the initial wave of foreclosures. Also he said this second round of foreclosures would not be as concentrated in the Inland counties.

DataQuick noted that with fewer foreclosed houses for bargain hunters, sales have begun to rise for higher priced houses. In Riverside County between April and May sales of homes priced less than $100,000 remained the same, but sales of homes priced more than $400,000 rose 5 percent.