Foreclosure signs are prominently displayed at a house in Glendale. (Kevork Djansezian / Associated…)
Foreclosed homes made up just a sixth of the Southland’s resale market last month – a level not seen in nearly five years and a major reason the market is rebounding so rapidly.
Foreclosures accounted for just 16.4% of the resale market in September – a substantial decline from the same month last year when foreclosures accounted for 32.3% of the market, real estate firm DataQuick reported Friday.
The decline is even more significant when compared to the worst of the region's foreclosure crisis, in February 2009, when foreclosed properties made up 56.7% of resales. The precipitous drop in foreclosures for sale is rapidly altering the Southland’s housing market. Home prices last month continued to climb even as sales plummeted.
“There’s been a major change in market mix, meaning fewer low-priced sales, fewer foreclosures,” DataQuick President John Walsh said.
Sales in Southern California declined for the first time in nine months as the Golden State experienced a shortage of affordable properties. Sales fell 20.4% from last year and were down 1.6% from the month prior, with a total of 17,859 newly built and previously owned homes bought across the region.
But that did not stop an upward march in the region's median. The median home price for all of Southern California was $315,000 last month, up 1.9% from August and 12.5% from September, DataQuick reported. Last month’s median was the highest since August 2008.
The decline in foreclosures also comes as record low mortgage rates have sparked a major increase in demand for housing. The few, lower-priced homes that are put on the market have become wildly competitive.
Indeed, competition for lower-priced homes in California is so hot that the number of cheaper homes available for sale has sunk more than 40% in the last year, pushing out many would-be buyers, according to a report by the real estate website Zillow released Thursday.
The report said that homes priced at $313,200 or less were the most competitive nationally. And nowhere did inventory in that price range drop more than in the Golden State over the last year, according to the website’s report.
Home price appreciation will probably be limited as the recovery progresses, DataQuick reported, because potential sellers who have sat on the fence for years are likely to begin putting their homes on the market. That will increase supply and keep a cap on prices.
Inventory of lower-priced homes plunges
Shortage of homes for sales creates fierce competition
U.S. home price index reaches highest point in almost two years