Southern California home sales jump in July 2008

August 18 2008 - Southern California home sales rose last month for the first time in nearly three years, although prices continued their downward spiral, data released today showed.

In July, the region’s median price fell 31% from a year ago to $348,000, the lowest since February 2004, when the local real estate market was in the throes of an extraordinary boom, according to La Jolla-based research firm MDA DataQuick.

The ongoing decline in prices appears to be spurring sales. The number of homes sold picked up in July for the first year-over-year expansion since October 2005. All counties, save Los Angeles County, posted at least a 10% increase from July 2007. The biggest gainer was the region’s foreclosure nucleus — Riverside County — where sales jumped 48.6%.

Los Angeles County was the weak link for home sales. The region’s biggest county posted an all-time July low of 6,592 sales, down 3.2% from a year ago. The median price, meanwhile, dropped 27% to $400,000.

Overall, 20,329 homes in the six-county region closed escrow last month, a 13.8% rise from a year ago.

“People are buying right now, buying at bargain prices. The price mechanism is working” said G.U. Krueger, an economist with Irvine-based real estate advisory firm IHP Capital Partners. “Higher sales are great, but foreclosures are still high and people need to appreciate that more discounts may be coming.”

Indeed, the uptick in demand hasn’t served to stabilize prices. Southern California home values persisted in their free fall in July, as the excesses of the boom years continue to come undone. Record numbers of Southern Californians continue to lose their homes to foreclosure each month, and a majority of these properties end up as bank-owned listings for sale at or below current market prices.

Every Southland county — Los Angeles, Orange, Ventura, Riverside, San Bernardino and San Diego — posted significant declines in prices last month, DataQuick reported. San Bernardino County’s median took the biggest cut, declining 35.2% to $230,000. Yet, sales there rose 25% year over year.

There’s no question that it’s the purchase of the foreclosures that are driving local sales. Foreclosure resales in July composed 43.6% of all transactions, DataQuick reported.

The question now is, whether rising demand can counter the ongoing price descent.

“Sales may have hit a bottom, but prices haven’t,” said Patrick Veling, president of research firm Real Data Strategies in Brea.

July’s numbers show that, although still slow, the pace of Southern California home sales may have found a floor. Each calendar month from September 2007 through June was an all-time sales low, but last month’s sales number, while still below the 20-year average, wasn’t the worst showing for a July.

The median is the price at which half of all homes sold for more, and half for less. It differs from an average, which can be skewed by a few multimillion-dollar sales.

Southern California home sales jump in July
by Annette Haddad | Los Angeles Times