Foreclosures Continue To Harangue California

April 18th, 2008 | Tags: Foreclosures

In southern California one third of all the houses up from sale comes from the foreclosure category. The numbers slowly rise as the average price of houses crawl down. Spring is the general time for nest building – buying houses. But this year it was at the lowest since the last two decades. Of all the houses that managed to get sold in March, 38% were foreclosed units. It was an increase of 8% from March 2007. In Riverside County the proportion was worse – half the houses sold were foreclosure brands. Even with 15% discount sales are not picking up.

In southern California houses are being sold at April 2004 rates. It is 20% below the highest mark of $505,000 in 2007. The only silver lining is, negatively speaking, house prices are plunging so fast that it is expected, according to economic laws, that soon the bottom will be hit. That will mean recovery. It is all part of the adjustment game.

The sale of housing units in March picked up in some California regions, by 18.8% from February this year. But it is nothing much to crow about because for the last two decades March sales have been higher than February by 38%. Many buyers are just waiting for the bottom to be hit before striking. Foreclosures or the fear of it is driving up the sales in places like the inland regions.

Those who are not under foreclosure cling to the belief that their houses are worth what it was valued at. They are not realistic. The fall in foreclosure tagged houses brings down the price of all others. It is a hard task for real estate agents to drive home this truth to sellers. Natalie Neith a real estate agent from Beverly Hills is facing this problem. Sellers do not want to bring down the price and consequently fail to get buyers. They are unwilling to understand that the worse is yet to come. Across the country foreclosure listings including all the stages of the judicial process rose by 57%. In California the rise was by 106% in March in comparison to March 2007.

Economist Christopher Thornberg of Beacon Economics commented that the housing depression was in contradiction to historical rules because it is happening while the economy is healthy. But soon the picture is going to change. Fears of recession are now real. Unemployment is rising while economic growth is falling.