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Home sales rise thanks to foreclosures

Closings jump 86% in September

Posted: October 30, 2008 8:45 p.m.
Updated: January 1, 2009 5:00 a.m.
 
One family’s tragic foreclosure is another family’s affordable abode.

Low interest rates and rock-bottom prices in September drove Santa Clarita Valley home sales up 86 percent compared to September 2007, according to information provided by the Southland Regional Association of Realtors Inc.

“Activity is picking up, with much of it centered on sales of bank-owned properties that are being sold as a result of foreclosure proceedings,” said Doreen Chastain-Shine, president of the association’s Santa Clarita Valley Division.

“It’s back to basics with lots of hard work to complete the sale of a foreclosure or a property listed for sale by a traditional owner,” she said. “However, it’s clear that we are near or at the bottom of this cycle and one-by-one foreclosures are being sold.”

Agents sold 195 single-family homes in September, an increase in activity of 85.7 percent compared to the record low of 105 sales a year ago, the association reported.

“Home sales are going up as a result of the decline in values and very good interest rates,” said Fred Arnold, a local broker and president of the California Associations of Mortgage Brokers.

The median price of single-family homes sold last month fell 22.6 percent from a year ago to $433,500, a drop of $126,500 from the $560,000 median of September 2007. The median price has been inching lower since the record high of $643,000 was set in April 2006, according to the association.

“Those who were locked out of the home-buying process over the last five years can now buy a home,” Arnold said. “They are teachers, city and county employees, young professionals, renters, a lot of individuals who were unable to jump into this market because it was moving so quickly.”

Steven Stebbins, a 15-year home mortgage consultant with Wells Fargo Bank, said it’s first-time home buyers who benefit the most in the current home market, including minorities and young couples.

“That’s the positive,” Arnold said. “The unfortunate part is the increase in sales and decrease in values is a result of people losing their homes.”

Investors are also taking their part in the market-place, according to Stebbins. But the role of investors in this increase is relatively minimal compared to first-time home buyers.

“A good majority are those people who are moving into a house to live in,” Arnold said.

While these new home owners are celebrating, Arnold knows it’s important to stay realistic about the foreclosure situation.

“We’re going to continue to see people lose their homes if we can’t figure out a way to keep them in,” he said. “The values are going to continue to soften if we don’t have an even greater national effort to keep individuals in their homes.”

For those who want to stay in their homes, can afford the payment, and have good jobs, it’s important they work with lenders to modify their loans, Arnold said.

“Sale of foreclosed properties will continue to occupy the market for some time,” said Jim Link, the association’s chief executive officer, “But I’m confident that the worst is passed.”

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