Lisa Simpson
Oct 7,2009
In: Foreclosure

Home Values in Southern California Improved

amidst-foreclosures

The US economy is on a tailspin what with unemployment at its peak and the real estate industry facing a deep crisis. Home values have crashed in many regions. Foreclosures are now a common phenomenon. Amidst this gloom, there’s a piece of good news – home values in Southern California have improved. According to a research agency, MDA DataQuick, the average price of homes had increased by 2.6 per cent in August. Home sales also improved – going up by 11 per cent from last year. However, in comparison to July this year, it had gone down by 10.8 per cent.

For the fourth consecutive month, the average home prices improved. The main reason is investors snatched up properties in suburbs giving a boost to home sales. There is also a decline in the sale of foreclosed homes. Take the example of an investor like Robert S. Moore, who is buying his third home. Fifty year old Moore paid $90,000 for a sprawling house in Riverside County. He intends to rent out the property for a decade.
Moore said that he buys the homes at a price which is lower than what it costs to construct them. Although prices have increased, the average price has remained at the 2002 level. From the peak price level of $505,000 reached two years ago, prices have come down by 45.5 per cent. First-time buyers and investors are responsible for price improvements. UCLA economist Edward Leamer said that the prices of only a miniscule portion of homes are declining. The homeowner should not think the value of his home is proceeding on the same line.

Leamer also observed that although home prices have crashed in many areas, increasing sales of homes and the rising median prices are indications of the fact that the housing market is on the recovery track.
About 38.8 per cent of homes sold last month were foreclosure sales. According to DataQuick, there is a backlog of foreclosed homes in the market. So far, the foreclosed homes had been the strongest sellers so far. Now the number of foreclosures is declining because banks do not have the necessary staff to carry out foreclosure filings. According to ForeclosureRadar, the number of foreclosures in California is 32 per cent lower than what it was a year ago.

Experts agree that unless the employment scenario improves the real estate market will not improve. As people default on mortgage payments, foreclosures will continue to rise.

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