‘The Beginning of the End’ of the Downturn?
That’s the opinion of at least one economist quoted in this Bloomberg News overview of California’s housing market. The gist is that there are several hopeful signs that we are nearing a bottom. mainly because bargain-hunters are snapping up foreclosures all over the state.
In Stockton, the U.S. metro area with the highest foreclosure rate, home sales more than doubled in the second quarter after prices fell by an average 37 percent, said PMZ Real Estate Corp., the area’s largest broker. Across the state, sales rose for three consecutive months starting in April after 30 straight months of declines, the California Association of Realtors said. About 40 percent of those transactions were foreclosure sales, DataQuick Information Systems reported.
“California is having a wrenching decline in wealth, but this is a cathartic event that will lay the foundation for a recovery,” said Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania, in an interview. “This signals the beginning of the end.”
Another hopeful sign: Inventory is starting to decrease, according to the California Association of Realtors.
The amount of time it would take to deplete the supply of homes decreased to 7.7 months from 10.2 months a year earlier, and the median price fell 38 percent to $368,250 last month.
Two-thirds of the homes being sold in the state are under $500,000. Many of the sales are in the areas hardest-hit by foreclosure.
Foreclosure sales accounted for 75 percent of June’s total in Merced County, home to the Merced metro area with the country’s second-highest foreclosure rate; 72 percent in Stanislaus County, home to the Modesto metro area with the third-highest foreclosure rate; and 66 percent in San Joaquin County, home to Stockton, data from DataQuick in La Jolla, California, and RealtyTrac show.
Sales of foreclosed properties equaled 63 percent of the total in Sacramento County, 62 percent in Riverside County, 58 percent in Solano County, 57 percent in San Bernardino County and 49 percent in Contra Costa County.
And the bargains will be around for awhile. Foreclosures won’t be going away anytime soon:
Discounts of as much as 50 percent will extend into 2010, helping clear a glut of foreclosures and leading to a more balanced housing market, said Ryan Ratcliff, an economist at the Anderson Forecast at the University of California in Los Angeles, and Christopher Thornberg, principal of Beacon Economics LLC in Los Angeles.
Although the bulk of foreclosure activity is taking place in outlying areas, there are scattered opportunities in the most desirable areas of L.A. A real estate investor acquaintance told me this week that he had put in a bid on a short-sale duplex near Beverly and Fairfax for $750,000 cash; it had last sold for $1.3 million three years ago.
Recent Redfin posts:
Summer slowdown: Will July end with no sales in Montrose?
Yes, People are Still Attempting Flips in This Market
