California Home Sales Highest In Two Years, As Foreclosures Head

 

http://business-news.thestreet.com/mercury-news-real-estate/story/california-home-sales-highest-two-years-foreclosures-head-east/1

 

NEW YORK (MainStreet) -- Looking for a bellwether in housing?

Try the Golden State, where home sales are finally taking off again. Is what's happening in California  on the docket for the rest of the U.S.? Maybe not, if foreclosure trends are factored into the equation.

California is seeing a run-up in home sales, just as the rest of the country is absorbing another wave of foreclosures, a trend that economists expect to continue.

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According to RealtyTrac   , U.S. foreclosure activityhas decreased, in fact, to the lowest level since July 2007. 

But a healthy percentage of those foreclosure declines come from Western states, which are shedding home closings faster than the rest of the nation.

"Rising foreclosure activity in many state and local markets in April was masked at the national level by sizable decreases in hard-hit foreclosure states like California, Arizona and Nevada," notes Brandon Moore, CEO of RealtyTrac, in a statement.

States like California are doing a better job of producing more creative options to foreclosure, or at least making unavoidable foreclosures get off the books more quickly.

"Those three states, and several other non-judicial foreclosure states like them, more efficiently processed foreclosures last year, resulting in fewer catch-up foreclosures this year,” Moore added. “In addition, more distressed loans are being diverted into short sales rather than becoming completed foreclosures.”

RealtyTrac reports that major eastern states like Pennsylvania, New Jersey, Florida, and in the midwest Michigan, all reported foreclosure increases of over 40%, a striking figure given the reductions in states like California and Arizona. For the record, California’s foreclosure rate decreased by 30% from April 2011 to April 2012.

Now, perhaps not so coincidentally, California is experiencing a boom in home sales, according to theCalifornia Association of Realtors   . 

In April, California home sales rose by 16%, and the median home price shot up over $300,000 for the first time in 16 months, the CAR reports.

 

Realtors say that low prices, low interest rates, and a brighter economy have all contributed to higher home sales, and higher home values.

 

“A brighter economic picture, coupled with record-high housing affordability, pushed the spring home buying season off to a strong start,” says CAR President LeFrancis Arnold. “With a continuing improving economy and interest rates declining to new record lows in recent weeks, we should see a steady improvement in the housing market throughout the end of the year.”

 

The CAR also says that it’s more expensive homes that are seeing the highest growth rates. Homes worth more than $500,000 have shot up 11% in value, while homes valued at under $500,000 grew only by 2%.

 

That last piece of news is especially encouraging. The over-$500,000 price hike is the result of more homes in that price range selling on the open market, the CAR says.

 

“The strong sales increase of higher-priced homes  resulted in a considerable decline of inventory of homes in the higher price ranges when compared with last year,” says CAR chief economist Leslie Appleton-Young. “This signifies the tight supply conditions we’ve been experiencing in the lower price ranges over the past several months are now extending into the upper price ranges.”

  

The association bases its numbers on surveys of 90 statewide realtors and from government sales figures.

 

Both the RealtyTrac and CAR numbers indicate a trend in U.S. housing that provides a ray of sunshine in hard-hit Western states like California, but gathering clouds in populous Eastern states like Pennsylvania and New Jersey.

 

In real estate, as with many U.S. economic indicators, the big trends really do start in California.