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A "for sale" sign stands outside a home in Pasadena, California. Prices in Southern California are gaining strength as foreclosure activity ebbs. And according to DataQuick, August sales haven't been this good since 2006.
RealtyTrac, a Southern California-based real-estate information service, released a report yesterday on August foreclosures that showed a big 42-percent drop in foreclosure starts in the state.
Now DataQuick, also SoCal-based, has put out an August report in Southland home prices that indicates a decline in foreclosures is helping prices in the region gain some upward momentum. This is from the company's press release:
Home prices have edged higher this year as greater demand, triggered by super-low mortgage rates and a mild economic recovery, has been met by a shrinking supply of homes for sale. But recent gains in the median sale price also reflect two other trends: a sharp drop in foreclosure resales, which often sell at a steep discount and are concentrated in lower-cost areas, as well as a substantial increase in mid- to high-end transactions.
Federal Reserve Bank of Kansas City
The Kansas City Financial Stress Index is trending back down to levels where investors have been historically comfortable taking on more risk.
The U.S. housing market seems to be improving, after completely collapsing in 2007-08. The Case-Shiller index, which tracks prices in 20 cities, is indicating that we've finally found a bottom for prices and could conceivably look forward to sustained price increases in the future. The foreclosure crisis is gradually working itself out — although it's still got a long way to go — and in the process benefitting the rental market, as people who've lost their homes take to renting as a transitional strategy.
The stage is now set for consumers who've spent the past four or five years in a state of fear to begin buying houses again. Prices are low and interest rates are, too — as low as they've ever been. So why have people been so afraid? They haven't wanted to tie up their money. Cash is king in a crisis. If you're worried that you might lose your job, you don't want to be cash-poor and potentially confronting a stack of unpaid bills.
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Tract homes in Santa Clarita, California. Pending homes sales in the U.S. are at levels not seen since 2010.
We've gotten two positive housing data sets in the past two days. First, the Case-Shiller index for June is indicating that the U.S. housing market has formed a bottom. Today, the National Association of Realtors released July pending home sales — those are homes that have been contracted for sale but not yet sold — and the improvement over 2011 is notable.
This is from the NAR:
"[T]he index is at the highest level since April 2010, which was shortly before the closing deadline for the home buyer tax credit. "While the month-to-month movement has been uneven, more importantly we now have 15 consecutive months of year-over-year gains in contract activity," said [Chief Economist Lawrence Yun].
Bear in mind that Case-Shiller is, to an extent, designed to counteract any excessive frothiness that might percolate in the U.S. housing market due to forward-looking indicators such as pending home sales. Case-Shiller focuses on prices and lags the market by a few months because in the 20 cities the index tracks only homes that have been sold are counted.
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A "for sale" sign stands outside a home in Pasadena. The Case-Shiller index for June showed prices moving up slightly in L.A. for June, but not as much as in May.
June Case-Shiller numbers have just been released. The news for Los Angeles — one of the 20 U.S. cities whose home prices the index tracks — is mixed. Prices in L.A. didn't mount gains that were as strong as May, when they ticked up 2.2 percent from April. For June, the rise was only 1.7 percent, just slightly better than the 1.5 percent the city's housing market turned in for the March-April period.
Year-over-year, prices in Los Angeles were down 0.6 percent. Yes, that's a tiny drop, but it was significant enough for Standard & Poor's, the company that owns the Case-Shiller index, to call it out, in the context of a national trend of price increases since last June: "There were only six cities – Atlanta, Chicago, Las Vegas, Los Angeles, New York and San Diego – where the annual rates of change were still negative."
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A Foreclosure sign is seen in front of a bank-owned home for sale in Las Vegas. We may start to see fewer of these if the U.S. housing market truly hits bottom.
Real estate and business information service CoreLogic has released June housing data, and for Los Angeles, the story is much the same as what we learned from the most recent Case-Shiller index. Year-over-year, national home prices were up 2.5; they increased 1.3 percent from May.
In what CoreLogic calls "Core Based Statistical Areas," the Los Angeles-Long Beach-Glendale region, prices were up very slightly year-over-year in June: 0.8 percent. Factoring in distressed sales, of which there's no shortage in the area, prices are up rather more, 3.5 percent.
The most recent Case-Shiller data is for May (Case-Shiller lags most other indices), but it also shows modest price upticks for Los Angeles, one of the 20 cities the index tracks.
Overall this a is good news, although it's also important to note the CoreLogic reports that California had one of the nation's steepest price declines during the housing collapse: almost 40 percent.