Southern California’s housing market showed signs of turning the corner in April as foreclosures made up the smallest share of sales in four years and the region’s median home price increased for the first time since late 2010.
Among other evidence of improvement, foreclosures dropped significantly in California and other Western states last month, a continuation of a trend that began last fall, according to data firm ForeclosureRadar. A separate report by the nation’s mortgage bankers released Wednesday showed that national delinquencies and foreclosures hit a four-year low, driven largely by declines in states in the West.
The easing of foreclosures and defaults is seen as key to righting the housing market because those homes tend to sell at a discount.
The region’s median home price rose 3.6% from a year earlier to $290,000 in April, real estate research firm DataQuick of San Diego reported Wednesday. The median is the point at which half the homes in the region sold for more and half for less. Those price gains were driven by increases in the Inland Empire, where bank-owned homes have been prevalent since the subprime mortgage crisis.
The median prices in Orange and Los Angeles counties fell, though because those coastal, pricier counties made up a larger share of the market than in prior months, they helped lift the overall median for the region.
“The housing market continued its painfully slow crawl back toward normalcy last month,” DataQuick President John Walsh said. “You can see it in the fading role of foreclosures, the uptick in median prices here and there and the higher levels of sales in coastal counties.”
Prices appear to be stabilizing as the number of homes on the market decreases and buyers get more competitive. Sales of single-family homes, condominiums and town homes rose 5.1% over April 2011 to hit 19,284 last month. Some analysts have said that sales would be even stronger this season if more homes were available.
The California Assn. of Realtors reported this week that the number of homes for sale statewide is low. Slightly more than four months’ worth of homes are on the market, according to the group’s inventory index. About six to seven months’ worth is considered a healthy market.
“Based on all the numbers and where we are going now, a bottom has been reached,” said Steven Thomas, whose company, ReportsOnHousing.com, produces monthly reports on Southland real estate with a focus on Orange County. “We are getting enough activity that it is causing prices to slowly rise.”
The lack of readily available homes is spurring buyers to get increasingly competitive with one another, real estate agents said. Mike Wagner, a real estate agent with Realty One Group in Anaheim, said several homes that he had been eyeing for his buyers racked up multiple offers, including one three-bedroom, two-bathroom property in Anaheim listed at $304,000. That property received 71 bids in a week, he said.
“It’s absolutely nuts with the number of buyers and the little amount of inventory, and we are seeing multiple offers and over-bidding left and right,” Wagner said. “This is going on time and time again, and it is part of the real estate market in spring 2012 — I don’t know how long it’s going to last.”
Foreclosures made up 28.6% of the Southern California resale market last month, the lowest share since January 2008, underscoring the big decline in bank-owned properties since the start of the crash. Investors have grown more willing to snap up foreclosures in big numbers to resell or hold as rentals.
Banks also are increasingly approving short sales — homes that are sold for less than the outstanding debts on the properties. These types of sales tend to bring higher prices than foreclosures do. Short sales made up 18.4% of the market, up from 17.3% a year earlier, DataQuick said.
Homes in San Diego, Orange, Los Angeles and Ventura counties made up 71.5% of sales last month, up from 68% in April 2011. The sales increase in these counties helped push the median higher, DataQuick said, because homes are generally costlier in these areas than they are in the Inland Empire, which was hit hard by the housing bust and subprime mortgage meltdown. The median is heavily influenced by the mix of homes selling during the month.
Last month’s $290,000 median price was still 42.6% below the $505,000 peak in 2007, indicating that even though housing may be on the mend, prices probably won’t return to those frothy heights any time soon.
In another flicker of hope for the battered housing markets, home loans in foreclosure or at least one payment past due have declined to the lowest level since 2008, according to a Mortgage Bankers Assn. report.
The quarterly study on delinquencies, released Wednesday morning, said 7.4% of all loans on one-unit to four-unit properties were past due at the end of the quarter, taking seasonal factors into consideration. That was down from 7.6% at the end of the fourth quarter and 8.3% a year earlier.
The number of homes actually being repossessed remained high as lenders worked through huge backlogs of distressed properties. Homes in foreclosure represented 4.39% of all homes, up from 4.38% in the fourth quarter but down from 4.52% a year earlier.
Combining delinquent loans and mortgages in foreclosure proceedings, 1 of every 9 mortgages in the U.S. was showing at least initial signs of distress. Still, that was down about 1 percentage point from a year earlier and from the final quarter of last year.
“Mortgage delinquencies normally fall during the first quarter of the year, but the declines we saw were even greater than the normal seasonal adjustments would predict,” said Michael Fratantoni, vice president of research at the home lender group. “So delinquencies are clearly continuing to improve.”
Also reported Wednesday was that new-home construction jumped in April.
Builders started construction on homes and apartments at a seasonally adjusted annual rate of 717,000 units. That was a 2.6% improvement over March and 29.9% above April 2011.
Single-family homes accounted for a significant chunk of that total, with an annual rate of 492,000 units.
Alan Whitman, managing director of Morgan Stanley Smith Barney, said an uptick in housing is key for investors and other market watchers.
“Housing is key to any kind of recovery. If we see construction starts increasing, we know that is going to mean more jobs, he said. “All of that translates and filters through the rest of the economy.”
ForeclosureRadar’s report of a slowdown in foreclosures, released Monday, wasn’t necessarily a sign of renewed health, ForeclosureRadar Chief Executive Sean O’Toole said.
In April, notice of default filings, the start of the foreclosure process in California, fell 15.8% from April 2011. The number of homes being repossessed by banks fell 60.6% and the number sold to third parties was down 12.2% in the Golden State.
“Foreclosure declines would be wonderful news if they were being driven by a true market recovery in which hundreds of thousands were no longer unable to make payments, and millions were no longer upside down,” O’Toole said. “That is not the reality today. Instead we are seeing unprecedented government intervention into the foreclosure process.”
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