California home sales up prices but prices down and 47% of sales are foreclosures

It looks like the great flush out of the California real estate market is underway. Banks recognizing that they are not landlords have decided to drop the prices on their foreclosures and they are being snapped up by eager buyers.

All of this information is both horrible and great at the same time. It is allowing the worst hit markets to regain their equilibrium while at the same time creating a solid bottom. There is so much foreclosed upon inventory that has to be absorbed that it takes a catharsis to clear it out and it breaks the last vestige of the banks that the old asset value is gone.

But when the bottom occurs and the losses are absorbed, then something magical happens. People can have a reasonable expectation of owning an affordable asset while having the chance to make a profit. So the market starts up again and fear goes away.

So if you are caught in this storm on the wrong side, you have my empathy, but the market is running it’s course. For all others we may just be heading closer to the other side of the tunnel.

“The figures released Thursday by MDA DataQuick showed 37,988 new and preowned homes were sold statewide last month, up 13.6 percent from August 2007 but down 3.8 percent from July.  The firm said 46.9 percent of all homes sold last month were foreclosed properties.

That helped send the statewide median home price plunging 35.3 percent to $301,000 during the year ended in August. Most of the foreclosed homes were located in inland regions that have taken the worst hits during the housing crisis.

“It’s the counties that have these large pockets of distressed properties where prices have plummeted,” MDA DataQuick spokesman Andrew LePage said. “If it weren’t for the big price drops in the inland markets, we wouldn’t see a year-over-year gain” in sales, he said.

Rich Cosner, president of a Prudential California Realty office in inland Southern California, said tumbling prices in his foreclosure-plagued region had attracted a torrent of buyers.  via Breitbart.com via The 4Realz Hotlist“

Article reprinted from The Real Estate Bloggers, September 25, 2008