Southern California Home Prices May Have Hit Bottom

Posted by: Chris Palmeri on March 17, 2009

Southern California home sales stayed above year-ago levels for the eighth consecutive month in February and the median price halted its month-to-month decline for the first time in ten months, according to market researcher MDA DataQuick.

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Sales consisted largely of bargain-hunting in affordable neighborhoods while buying and selling in more expensive established areas remained largely on hold. A total of 15,231 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was essentially unchanged from 15,227 for January, and up 41.3 percent from 10,777 for February 2008.
Sales have increased on a year-to-year basis since last July. February a year ago was the slowest February in DataQuick’s statistics, which go back to 1988. The February average is 18,120. “The market is so tilted away from normal mainstream activity that it’s impossible to generalize or predict based on the patterns we’re seeing,” said John Walsh, MDA DataQuick president.
Regionwide, sales of foreclosed homes accounted for 56.4 percent of February’s activity, which was the same as the revised January figure and up from 36.2 percent in February 2008.
The median price paid for a Southern California home was $250,000 last month, the same as in January. That was down 38.7 percent from $408,000 for February a year ago. The median peaked at $505,000 in mid 2007.
The drop in the median price overstates the decline in home values, the company said. The more affordable inland markets with most of the discounted foreclosures account for a large share of sales, while homes in the upper half of the market are not selling well, and are under-represented in the statistics. When jumbo loans of more than $417,000 were readily available in early 2007, they accounted for just under 40 percent of all home purchases. Last month they accounted for just 10.3 percent.
At the same time, a common form of financing used by first-time home buyers in more affordable neighborhoods is near record levels. Government-insured, FHA mortgages made up about 38 percent of all purchase loans in February, up from 6.4 percent in February 2008.

Reader Comments

Gman

May 1, 2009 5:21 PM

More like "hit and bounced" "off a ledge" after the prices began to fall over the edge of the cliff...... :)

See recent study results below:

NEW STUDY SHOWS MORE THAN 2.1 MILLION CALIFORNIA SMALL BUSINESS JOBS WILL BE LOST OVER THE NEXT 3 TO 4 YEARS

1.5 Million Face Immediate Risk of Job Loss as a Result of Small Business Owners Who Took out Toxic Home Mortgages according to Bornstein & Song, CPAs & Consultants Study with MerchantCircle

Toxic Mortgage Study will Continue Nationally, Including Florida, Arizona, Michigan, and Nevada

Los Altos, CA April 23, 2009— New study results show more than one-third of all California small business owners took out risky or toxic mortgages such as Alt-A, Alt-A ARMs, Option ARMs, Interest-Only, and Subprime, etc. to get cash for business expenses during the peak of their home values from 2004 to 2007. As the first wave of mortgage resets hit, small business owners will be at-risk of “payment shock” and default as their monthly mortgage payments skyrocket. The toxic mortgage resets began in the 4th Quarter 2008 and will continue through 2012. “The resulting defaults will be the cause of the 2nd “Tsunami” Wave of Foreclosures that will dwarf the subprime crisis and will take many homeowners and small business owners by surprise. In California, these inflated mortgage payments will threaten more than 2.1 million small business jobs,” said Prof. Samuel D. Bornstein.

The California Small Business Toxic Mortgage Survey is the first to provide compelling evidence of California’s small business involvement in the toxic mortgage crisis, foreclosures, and job loss. The survey was created and analyzed by Prof. Samuel D. Bornstein and Jung I. Song of Bornstein & Song, CPAs & Consultants, as part of their small business research which they have been conducting since 2000.

MerchantCircle was selected by Prof. Bornstein & Jung I. Song, CPA to run this survey. MerchantCircle comprises the largest number of small business owners in the US with more than 750,000 members. Its membership provides a legitimate sample of the nation’s small business owner community.

“I purchased my home in 1999 for 235K,” says Keith Capsuto, owner KC Photography & Music in Oxnard, CA. “Within the first 3 yrs. it had a value of $650K. I did the foolish thing of buying the home with an ARM loan to save money for business expenses. Up to the turnaround in the real estate market, I had been doing a fair amount of business, but it dwindled off sharply and by 2008, I was almost bankrupt. Now in 2009, business is about gone! I am 8 months behind on my mortgage with credit cards up to the hilt from business expenses. I am attempting to work with my mortgage company and on the brink of filing for bankruptcy.

This survey confirms Prof. Bornstein and Jung I. Song, CPA’s research and highlights the fact that “small business holds the key to a solution of this crisis and must be addressed in order to mitigate the nation’s foreclosures and job loss.” The survey determined that a significant number of California small business owners are at-risk of losing their homes to foreclosure and their businesses to failure at the resetting of their toxic mortgages. “The resulting job loss will contribute to California’s spiking unemployment and cause further financial distress to California’s economy,” according to Prof. Samuel D. Bornstein.

“Small business owners are the key to our nation’s future success – as they create roughly 2/3 of all new American jobs,” says Darren Waddell, Vice President of MerchantCircle. “With the nation’s largest small business membership base, it’s very important that we work to highlight issues that they face collectively as a group and bring it to the attention of our elected officials.”

Survey Highlights:

“It is a tragedy when an individual borrower defaults on the mortgage and loses his/her home. The tragedy is magnified when the borrower is a small business owner employing from 1 to 21+ employees. The loss of jobs related to mortgage default and the resulting business failure will further weaken our economy and prolong the recession,” said Prof. Samuel D. Bornstein.

34.9 % (1,173,900* At-Risk) CA Small Business Owners used risky or Toxic Mortgages or refinancing to get cash for business expenses. These mortgages are at-risk of default at reset.
29.9 % (1,005,700* At-Risk) CA Small Business Owners are “very worried” about their monthly mortgage payment due at reset. They are at-risk of “Payment Shock”.
Estimated Job Loss for CA Small Business Owners Who are “Very Worried”(2009 to 2012)

Low 2,100,500
High 3,272,300+
28.7 % (965,300* At-Risk) CA Small Business Owners are At-Risk of “Payment Shock”. They do not know the monthly mortgage payment that they will be required to pay at reset.
17.9 % (602,100* are at Immediate Risk of Default) CA Small Business Owners are delinquent, having missed 1 to 3 or more monthly mortgage payments at this date. More delinquencies are expected in the upcoming resets in 2009 to 2012.

Estimated Job Loss for CA Small Business Owners Who are Now Delinquent

Low 1,461,400
High 2,582,500+

* Based upon 3,363,476 CA Small Business Owners, according to 2007 report prepared for the Small Business Administration’s office of Advocacy.

About MerchantCircle
Founded in 2005, MerchantCircle is the largest social network of local business owners in the nation, combining social networking features with a customizable web listing that allows local merchants to attract new customers. More than 15 million MerchantCircle business listings across the country are easily accessed on major search engines.

Currently, over 670,000 merchants on the MerchantCircle network upload pictures, blog, create coupons and newsletters, and connect with other merchants. In addition to its free services, MerchantCircle offers a portfolio of online advertising services including Search Engine Marketing, Website Directory Submission, Web Content Creation, Instant Website Development and Business Verification Services.

MerchantCircle is located on Main St. in downtown Los Altos, Calif., and is funded by Rustic Canyon Partners, Scale Venture Partners, Disney’s Steamboat Ventures, and IAC. Learn more at www.merchantcircle.com.

willson

December 23, 2009 3:21 PM


Interesting… I might try some of this on my blog, too. It’s quite interesting how you sometimes stop being innovative and just go for an accepted solution without actually trying to improve it… you make a couple of good points


online job

willson

December 23, 2009 3:24 PM


Interesting… I might try some of this on my blog, too. It’s quite interesting how you sometimes stop being innovative and just go for an accepted solution without actually trying to improve it… you make a couple of good points


online job

willson

December 23, 2009 3:25 PM


Interesting… I might try some of this on my blog, too. It’s quite interesting how you sometimes stop being innovative and just go for an accepted solution without actually trying to improve it… you make a couple of good points


online job

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About

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.

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