Southern California Home Prices May Have Hit Bottom

Southern California home sales stayed above year-ago levels for the eighth consecutive month in February and the median price halted its month-to-month decline for the first time in ten months, according to market researcher MDA DataQuick.

Sales consisted largely of bargain-hunting in affordable neighborhoods while buying and selling in more expensive established areas remained largely on hold. A total of 15,231 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was essentially unchanged from 15,227 for January, and up 41.3 percent from 10,777 for February 2008. Sales have increased on a year-to-year basis since last July. February a year ago was the slowest February in DataQuick’s statistics, which go back to 1988. The February average is 18,120. “The market is so tilted away from normal mainstream activity that it’s impossible to generalize or predict based on the patterns we’re seeing,” said John Walsh, MDA DataQuick president. Regionwide, sales of foreclosed homes accounted for 56.4 percent of February’s activity, which was the same as the revised January figure and up from 36.2 percent in February 2008. The median price paid for a Southern California home was $250,000 last month, the same as in January. That was down 38.7 percent from $408,000 for February a year ago. The median peaked at $505,000 in mid 2007. The drop in the median price overstates the decline in home values, the company said. The more affordable inland markets with most of the discounted foreclosures account for a large share of sales, while homes in the upper half of the market are not selling well, and are under-represented in the statistics. When jumbo loans of more than $417,000 were readily available in early 2007, they accounted for just under 40 percent of all home purchases. Last month they accounted for just 10.3 percent. At the same time, a common form of financing used by first-time home buyers in more affordable neighborhoods is near record levels. Government-insured, FHA mortgages made up about 38 percent of all purchase loans in February, up from 6.4 percent in February 2008.