Home sales activity in southern California continues to struggle with the lowest October sales total in three years. Multiple factors are hurting chances for a recovery, as builders can't compete with the low price of foreclosures and potential buyers of high-end homes are having difficulty securing financing. See the following article from HousingWire for more on this.
Southern California home sales dropped in October to their lowest level in three years amid doubts about the drawn-out housing recovery, tight mortgage lending and the expired homebuyer tax credit.
The median price paid for a home rose on a year-over-year basis for the 11th consecutive month, but was the year’s smallest increase with just a 1.1% uptick in pricing over October 2009, according to MDA DataQuick of San Diego.
The percentage of sales that were foreclosures declined from year-ago figures, the company said.
A total of 16,744 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month, down 7.4% from 18,091 in September, and down 24.3% from 22,132 in October 2009.
MDA DataQuick said last month’s sales were the lowest for an October since 2007, when 12,913 homes sold, and the second-lowest since 1988, when DataQuick’s statistics begin.
"In addition to a lousy economy, the housing market still has a couple of nasty bottlenecks it has to contend with," said John Walsh, MDA DataQuick president. "First, sales of newly built homes are at a low, mostly because builders can’t build at a low enough price to compete with the inventory of resale homes, many of which are short sales or foreclosures."
"Also, lenders still haven’t opened the mortgage money spigot for buying move-up and prestige properties. These properties have come down in value by about half as much as entry-level homes. But trying to finance a higher-end purchase can be a real grind, even for well-qualified buyers," he said.
The median price paid for a Southern California home was $283,000 in October, down 4.2% from $295,500 in September, and up 1.1% from $280,000 in October 2009.
Foreclosure resales accounted for 34.7% of the resale market in October, up slightly from a revised 33.6% in September but down from 40.4% a year ago. The all-time high was 56.7% in February 2009, DataQuick reported.
Government-insured FHA loans accounted for 35.8% of all mortgages used to purchase homes in October, relatively flat from September and a year ago.
Absentee buyers — mostly investors and some second-home purchasers — bought 21.8% of the homes sold in Southern California in October, paying a median of $204,500. Buyers who appeared to have paid all cash – with no indication that a mortgage was recorded — accounted for 27.1% of October sales.
Flipping — buying and reselling a home within a six-month period — accounted for 3.7% of the sales, flat with September but up from 2.9% a year earlier.
This article has been republished from HousingWire. You can also view this article at HousingWire, a mortgage and real estate news site.