Sales Up for the First Time Since ’05

At last, some positive news in the monthly sales numbers:  July home sales were up year over year for the first time since 2005, rising to their highest level in more than a year. From the DataQuick news release:

A total of 20,329 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 16.7 percent from 17,424 the previous month and up 13.8 percent from 17,867 for July a year ago, according to San Diego-based MDA DataQuick.

Last month’s sales count was the highest since 21,856 homes were sold in March 2007, though it still fell 23 percent short of the average July sales total since 1988, when MDA DataQuick’s statistics begin. From last September through June, sales for each month were at an all-time low for that particular calendar month, with the exception of April which was the next lowest. Last month’s sales total was the first since September 2005 to rise above the year-ago level.

“What we’re looking at is a fire sale of properties in newer affordable neighborhoods that were bought or refinanced near the price peak with lousy mortgages. What we’re still not seeing is this level of distress spreading to more expensive or established neighborhoods,” said John Walsh, MDA DataQuick president.

The L.A. Times story notes that Los Angeles was the only county whose sales were down from last July.

Los Angeles County, the one exception to the trend, hasn’t been hit as hard by foreclosures and has relatively fewer discounted homes for sale. That’s probably why it saw a slight decline in sales instead of the increase seen in neighboring counties, said John Karevoll, MDA DataQuick’s chief analyst.

Does this mean we’ve hit a bottom?  Likely not; most economists think prices will fall further.  But when people think the price is right, they’ll buy.

G.U. Krueger, an economist with Irvine-based real estate advisory firm IHP Capital Partners, said the uptick was evidence that the “price mechanism is working” — that is, lower prices are bringing buyers back into the market.

But he and other experts believe that prices will take months to hit bottom, citing the wave of foreclosures and the tightening of lending standards because of the continuing credit crunch.

“Higher sales are great, but foreclosures are still high and people need to appreciate that more discounts may be coming,” Krueger said.

But some people never learn. The speculators are still out there.  From the L.A. Times story:

For bargain hunters like Dale Smet of Santa Clarita, the timing is perfect.

“I’ve been waiting for this market,” he said.

Smet, who works in marketing for Southern California Gas Co., said he carefully conserved an equity line of credit during the boom years, which he tapped to pay $300,000 cash last month for two foreclosed condos near his house. And that was after being outbid on a handful of other bank-owned homes in the Santa Clarita area.

After a 15-day escrow, Smet did the necessary cosmetic repairs himself and said he had no trouble finding renters willing to pay about $1,500 a month for each unit. He hopes eventually to take a first mortgage on each with monthly payments that he figures would be less than his rental income.

“This isn’t risk free. But I don’t care if home prices go down,” Smet said. “I’ll just buy more.”

Sigh.

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