A new breed of animal has entered the real estate market the Property Shark. The latest results for Southern California from DataQuick Information Services show what’s going on. The media price in May fell a staggering 27% from $505,000 to $370,000, the largest drop since the firm began recording prices back in 1988. We’re now back to March 2004 prices.
Who’s buying? Plenty of first time buyers who got shut out of market by the stratospheric rise in years past. But there’s also anecdotal evidence investors are buying property. Smelling blood, they’re swimming in to take advantage of other people’s distress.
Hardest hit markets are those far off ex-urbs where residents are double-whammied by falling home prices and rising gasoline costs. An astonishing 37% of all homes resold in the Southern California market in May were foreclosures. In far flung counties such as Riverside, foreclosures were more than half of the market.
DataQuick reports that about 42% of homes sold for less than their prior sale price. Most of the prior sales occurred between 2004 and mid-2006. Sales were much slower at the high-end, $417,000 and up, which have held up better to date than entry level homes. “What horsepower this market can generate right now is mainly fueled by bargain shopping, especially by first-time buyers and investors in inland areas,” explained Andrew LePage, an analyst for DataQuick.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.