Buyer reluctance and tight lending standards last month continued to suppress home sales and prices in Inland Southern California, with investors and cash buyers playing an extraordinarily important role.
Home sales rose from November to December, following a normal seasonal trend. But the 3,584 homes sold in Riverside County last month was 3 percent less than in December 2010, and the median price of $194,000 — where half sold for more and half for less — also showed a 3 percent year-to-year drop.
San Bernardino County saw the biggest percent sales decline in the six-county Southern California region, a year-to-year drop of 7.2 percent to 2,418 sales in December. The median price of homes sold last month in San Bernardino County was $150,000, or 1.3 percent lower than a year earlier.
“Last year ended much the way it began, with pitifully low new-home sales, record investor activity, tight credit and lots of potential buyers and sellers just sitting tight,” said John Walsh, president of DataQuick, which on Tuesday released the December housing market figures for Southern California.
New home sales in Riverside and San Bernardino counties fell to record lows for a December, with 328 sales in Riverside County, which was almost 16 percent fewer than a year earlier, and 99 sales in San Bernardino County, down nearly 14 percent from December 2010.
Bob Yoder, Southern California division president of Shea Homes, said he has watched the drop in Inland home sales matched by a slowdown in the launching of new projects. Yoder said Shea is not planning any new communities in the Inland Empire in 2012 or 2013. For now, Shea is focusing on Orange County because that’s where job growth is occurring more quickly, he said.
The biggest barrier to stronger home sales is the anemic pace of job growth, said Chapman University economist Esmael Adibi. “Everything goes back to job creation,” he said. “Once people find jobs then household formation occurs. A kid living with parents who finds a job then needs a rental or will buy a home.”
Last month absentee buyers mostly investors but also buyers of vacation homes — accounted for a record 32.9 percent of home sales in Riverside County and a near record 34.4% of home sales in San Bernardino County. Vigorous investment activity explains in large part the concentration of sales in lower priced homes and the prevalence of all-cash purchases, analysts said.
Last month 34.9 percent of homes purchased in Riverside County and 36.4 percent of homes purchased in San Bernardino County were for cash, which is roughly double the 10-year monthly average.
“Some people think housing is where they should park their cash and some don’t have a choice because they couldn’t get a loan if they tried. And some could be retirees who are downsizing,” selling a larger house and buying a smaller one for cash, said DataQuick spokesman Andrew LePage.
Distressed properties also continued to dominate the market. Last month 61.6 percent of homes sold Riverside County and 62.6 percent in San Bernardino County were foreclosures or short sales that closed at a lower price than the existing mortgage.
Leslie Appleton-Young, chief economist for the California Association of Realtors, noted that there are multiple offers for homes priced below $300,000, many of which are foreclosures sold by banks. “If we had a greater input of distressed properties, they would sell,” she said.
But she said she believes there are prospective “buyers on the sidelines trying to time the bottom of the market” and prospective sellers waiting for a market rebound. Still, in a statement about the association’s December state housing report that also was released Tuesday Appleton-Young said home sales were slightly better in the fourth quarter than she had expected “thanks to recent improving consumer confidence and an economy that’s slowly showing signs of growth.”
Source: http://www.pe.com/business/real-estate-headlines/20120117-real-estate-december-inland-home-sales-prices-drop.ece
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