Inland Empire had highest foreclosure filings of the top 100 Metros in U.S.

By
Services for Real Estate Pros with Pacific Servicing

A slow housing market turned bleaker in July, with Riverside County seeing its median sales price drop below $400,000 for the first time in 21 months, settling at $399,000, or 3.9 percent less than the same month a year ago.

Figures released Tuesday by DataQuick Information Systems showed San Bernardino County's median price -- the level at which half the homes sold for a lower price and half sold higher -- dropped 3.1 percent to $355,000. After several months of flat pricing, that county registered its first annual price decline since August 1998, according to DataQuick.

Even as the number of homes sold plunged almost 42 percent from a year ago in Riverside County and 43 percent in San Bernardino County, experts said that the underlying economy remains strong and buyer's market conditions should eventually bring bargains for home shoppers, even as entry-level buyers remain shut out.

The July data arrived as a national mid-year report by the research firm RealtyTrac showed one in every 33 Inland households -- or more than 22,000 properties -- facing some type of foreclosure filing. The report showed the Inland area ranking fourth for the percentage of households in the foreclosure process, with 41,351 filings of default, trustee auction and foreclosure sales, and bank repossessions during the first six months of 2007. That was almost triple the rate for the first half of 2006.

In its percentage of households facing a foreclosure action, the Inland area ranked behind only the Stockton, Detroit and Las Vegas markets. But the Inland region's foreclosure filings were the highest of all 100 metro markets in the RealtyTrac report.

According to DataQuick figures, Riverside County's July median price marked a 7.6 percent drop from the county's peak of $432,000 in December 2006. San Bernardino's price was off 6.5 percent from its November 2006 peak of $380,000, according to DataQuick figures.

DataQuick analyst Andrew LePage said the Inland region is witnessing patterns seen several months ago in the inland northern and central counties of California. LePage said "spillover" communities -- where buyers go to get more affordable housing -- tend to see a more pronounced impact from housing downturns than coastal communities.

That's in part because they have a higher number of relatively lower-income buyers who used risky financing to get into homes.

"Unfortunately, those buyers are the ones who are closest to the financial edge, and they're the ones who are getting shoved off right now," LePage said.

Greg Berkemer, executive vice president of the Palm Desert-based California Desert Association of Realtors, said the ongoing focus on foreclosures and subprime lending troubles, coupled with higher inventories of homes for sale, are prompting many would-be buyers to play "wait and see."

"It's often a matter of counseling buyers and sellers to set realistic expectations on both sides of the transaction," Berkemer said.

Berkemer said first-time buyers continue to be affected by tighter mortgage underwriting standards and housing affordability, which has not improved significantly despite price declines in most California regions.

"The sales decline is not driven by weakening economic conditions," Berkemer said. "Both the California and U.S. economies continue to expand, which could bring about a quicker recovery of the housing market than in the past when the housing market declined due to a poor economy."

With the median price rising in Los Angeles County, due primarily to a relative lack of new supply, DataQuick said Southern California managed to register an overall price appreciation of 3.7 percent from a year ago, even as total sales dropped more than 27 percent.

Riverside and San Bernardino counties saw the region's sharpest declines in total homes sold, and only Ventura County saw a worse drop in the median price, down 5.1 percent.

With a total of 17,867 new and resale homes sold in Southern California, last month was the slowest July since 1995, when 16,225 properties were sold.

"These are interesting times because the slowdown in home sales isn't part of a broader economic slowdown; it's a post-frenzy re-balancing act," said Marshall Prentice, president of La Jolla-based DataQuick. "The last time we had sales this slow, Southern California had been in a recession for a few years."

According to recent data from Multi-Regional Multiple Listing Service Inc., which does not include the Coachella Valley, there are around 35,000 unsold resale homes on the Inland market. That compares with around 26,000 a year ago, according to local real-estate agents.

Michael Teer, a Riverside real-estate agent and president of the Inland Valley Association of Realtors, said recently there is about an eight-month supply of resale homes on the market, compared with five to six months of supply in a "normal" market.

Teer said the buyer's market conditions should remain in place for the next several months, with low interest rates, more choices for buyers, and many sellers willing to make concessions to close deals, such as paying all or part of closing costs.

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Ryan Case - Partner

Pacific Servicing, LLC

Ryan@PacificServicing.com

(800) 313-9050 - Office

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