The rise in home sales is an important step to housing market recovery, UC Irvine economist Kerry Vandell said, because the sales help to clear the market's glut of homes.
"There seems to be some market clearance going on," said Vandell, director of the Center for Real Estate at the university's Merage School of Business. Among lower-priced homes, "product is moving, which will in fact stabilize that [segment] of the market."
In April 2008, foreclosed homes made up 38% of homes sold. Last month, previously foreclosed homes accounted for 54% of the sales total. April was the seventh consecutive month in which most homes sold in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties had been foreclosures.
The trend of falling prices drawing buyers has been slowly working its way up the price ladder. A year earlier, the median home price was still a hefty $435,000 in Los Angeles County, and home sales were down 31% from April 2007. With Los Angeles County's median at $300,000 last month -- down 31% from a year ago -- sales were up 28% from April 2008.
The connection between prices and sales was clear in two adjacent Woodland Hills ZIP Codes last month. In one, the median April sales price fell 27% from a year earlier to $521,000 -- and home sales were up 86%. In the other ZIP Code, the median price fell by a more modest 15% to $605,000, and April sales fell 9% from a year earlier.
The worst may be yet to come for wealthier areas because "we still face two big threats to price stability: layoffs, which can cause foreclosures across the home price spectrum, and possibly a new round of foreclosures triggered by defaults on 'option ARM' and 'stated income' loans used in mid- to high-end markets," DataQuick President John Walsh said.
Interest rates remain relatively high and credit standards tough for "jumbo" mortgages of $417,000 and above. DataQuick reported such loans comprised about 11% of mortgages for homes sold last month, down from about 40% of sales in late 2007.
Mortgage defaults in Los Angeles County have been rising at a faster rate this year than in the Inland Empire, which saw its wave of foreclosures earlier. In the first quarter of 2009, Los Angeles County default filings -- the first stage in the foreclosure process, which occurs when a borrower has missed multiple payments -- were up 38% in Los Angeles County from the same period last year. In Riverside County, defaults in the first quarter were up 13%, and in San Bernardino defaults for the quarter rose 19%, according to DataQuick.
But Los Angeles County's median home price actually held steady in April for the fourth month in a row, and San Diego's median rose a bit from March to $290,000, up from $285,000. The median price can rise as a greater number of higher-priced homes sell -- even if prices for those individual properties fall.
"If the bottom is flat but the top goes down, you can get a paradoxical outcome," Green said. "The median price goes up even as prices are falling."
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peter.hong@latimes.com
