A glimmer of sunlight poked through the housing market gloom this week, when the latest statistics on sales, prices and defaults in Southern California were released. Home sales were nearly 14% higher last month than in July 2007, the first year-over-year increase in almost three years. And although foreclosures continued at more than twice the pace of last summer, the number in July was 8% lower than in June.
A revived housing market would be good for everyone, given how large a role it plays in the general economy. But even if last month's data are a hopeful harbinger, there's still plenty of bad news to come. Defaults in "liar loans" and "pick-a-payment" mortgages are just starting to ramp up, and the collapsing stock prices of Fannie Mae and Freddie Mac could lead to a costly government bailout. Based on the 1990s housing bust in California, Times blogger Peter Viles predicts that property values will continue to fall for several more years, even though the pace of sales may be starting to pick up.
