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"Going Beyond The Numbers"
Insiders Report:
A new report shows an increase in home sales along with a slight gain in prices. On the surface this is good news for Los Angeles, Ca homes for sale...but does this mean a solid recovery is on the horizon?
Probably not...and you need to look beyond the numbers to understand why.
Home sales in Los Angeles County and the rest of Southern California hit a three-year high in July and prices continued to firm up as buyers turned their focus to more expensive properties, a market tracker said Tuesday.
HOME SALES
Southern California home sales/median price:
July 2009: 24,104/$ 268,000
July 2008: 20,329/$ 348,000
LA County home sales/median price
July 2009: 8,082/$ 321,000
July 2008: 6,592/$ 400,00
The interesting part of this report is the activity in the "more expensive properties" which has boosted the modest increase in prices over the last few months...but don't expect those increases to last.
The increase from this sector is being pushed more by "investors" bottom feeding on distressed properties than home buyers trading up into bigger, more expensive homes.
The economic fundamentals are still not strong enough to sustain any real momentum in the "jumbo" market, even though the report from DataQuick indicates that "some buyers are now migrating to more expensive properties."
During July, 15 percent of the mortgages issued were for properties priced above $ 417,000, the most since last August. These type of mortgages used to command up to 40% of the market...so this sector has a long way to go to regain any real market share.
There is still a large wave of future foreclosures in this sector that have to be absorbed into the market place in the months ahead. For this to happen at any level that will demonstrate real growth, the economy will have to be in a much better place than it is currently.
"Normally, three to six months would be a really strong indication that that prices have flattened out - but the problem is we're not in normal times," said DataQuick analyst Andrew LePage. "We're just coming out of, or still in, a deep recession."
Not surprisingly, market watchers expect another spike in foreclosures in the coming months.
"The recent drop in foreclosure resales, coupled with the rise in high-end sales, has helped stabilize some of the regional home price measures. But there's still quite a bit of distress out there," DataQuick president John Walsh said in a statement.
The real strength in this market comes from the lower end where the fundamental are much stronger. Buyers looking for a Los Angeles home loan can take advantage of FHA government insured loans that offer down payments as low as 3.5% and lower interest rates than the "jumbos."
A Jumbo Los Angeles home mortgage requires a larger down payment and higher rates for those who qualify...and finding enough qualified buyers to keep this sector stable and growing seems unlikely for now.
If you are a buyer looking to enter the upper end of the market, time is on your side.
The upper end of the market doesn't figure to turn around until their is sustained economic growth...and that's not likely to happen anytime soon.
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