Western home sales increase
AP Real Estate Writer
LOS ANGELES – Home sales in the Western region of the country posted a 9 percent annual increase in May as homebuyers jumped on low interest rates and falling prices, according to two reports released Tuesday.
Foreclosures and other distressed sales continued to drag down the median home sales price in the West. It tumbled more than 30 percent from May of last year to $197,700 – the biggest drop in any region. That helped pull the national median down nearly 17 percent to $173,000, the National Association of Realtors said.
Nationally, sales rose slightly from April to May, but were roughly 7 percent below levels a year ago, without adjusting for seasonal factors.
Home sales in the West have posted annual increases every month going back to at least last summer, when many first-time homebuyers and investors began snapping up sharply discounted bank-owned properties in Nevada, Arizona and California.
The foreclosure rush has helped whittle down the number of homes on the market in metros like Los Angeles and Las Vegas, where inventory has plunged by roughly half since May 2008, according to The Associated Press-Re/Max Monthly Housing Report, released Tuesday.
The trend suggests select markets could be turning around, but the recent rise in interest rates and the lingering economic dark clouds still threaten the region’s recovery.
“Yes, sales have increased and inventory has come down, but there’s still a tremendous amount of downward pressure on prices,” said Chris Heller, agent-owner of Keller Williams Realty in the northern San Diego suburb of Del Mar. “The amount of properties that are in the foreclosure process is enormous.”
Phoenix, Las Vegas, Los Angeles, San Diego and San Francisco were the only major metros in the West to register an increase in home sales last month, according to the AP-Re/Max report.
They also were among the top 10 U.S. metros to post the sharpest median price declines in May, according to the report which tallies all home sales in the metropolitan statistical area by all real estate agents, regardless of company affiliation.
Only one Western market, Anchorage, Alaska, saw its median sales price rise, but not by much – about half a percent.
Elsewhere in the region, sales declined last month Anchorage, Denver, Seattle, Honolulu, Portland, Ore., Albuquerque, N.M., Boise, Idaho, and Billings, Mont.
The bursting of the housing bubble helped push the U.S. economy into the worst financial crisis in seven decades. Now the economy is hobbling the recovery of the real estate market. Corporate layoffs are forcing more cash-strapped homeowners to miss their monthly mortgage payments. Unemployment, currently at 9.4 percent, isn’t expected to peak until mid-2010 and foreclosures should crest about six months after.
“We’re in the bottom of the seventh-inning” of the housing crisis, said Mark Zandi, chief economist at Moody’s Economy.com.
But there’s still a risk the housing bust could go into extra innings.
Interest rates, for example, have climbed back from their all-time lows this spring. The average rate on a 30-year, fixed-rate mortgage was 5.38 percent last week, according to Freddie Mac.
Mindful of the negative trends, Patrick Newport, an economist with IHS Global insight, says home sales could fall another 9 percent from last month’s levels. “Things are going to get a little bit worse,” he said.
Neil Brooks, a real estate agent with Century 21 Arizona-Foothills in Phoenix, said his transactions were better in May than last year and June looks good too. Most of his clients are first-time homebuyers, but many are investors or homeowners looking for a vacation home. Roughly 70 percent of his sales were foreclosed homes.
“We’re still real busy,” he said, adding that most bids are for homes priced in the $200,000 range or below. “Homes in that category right now are getting multiple offers on them over the asking price.”
Buyers of higher-end homes are increasingly putting 35 percent down or more to ensure they can get financing. That’s because the cost and qualifying criteria loans has become harder to get, Brooks said.