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San Fernando Valley Home Sales Leap 25 Percent in May

http://business-news.thestreet.com/daily-news/story/san-fernando-valley-home-sales-leap-25-percent-may/1

Home sales in the San Fernando Valley jumped 25 percent in May, the biggest increase in 30 months and a sign that the market may be on the mend, a research center said Thursday.

And in another encouraging indicator, the number of properties foreclosed on in May plunged 52.5 percent from a year earlier, said the San Fernando Valley Economic Research Center at California State University, Northridge.

"This is really good news. Foreclosures are no longer driving the market," said economist William W. Roberts, the center's director.

Last month, sales of new and previously owned houses and condos increased to 1,537 from 1,234 a year ago and increased 10 percent from 1,402 in April, according to the center, which tracks the market from Glendale through Calabasas.

San Fernando Valley Home Sales Leap 25 Percent in May

The year-over-year sales increase is the biggest since a 34 percent gain in December 2009.

"As best I can tell it looks like a turning point, at least in sales. We are not being dragged down by foreclosures anymore," Roberts said. "We are shaping up to have a much better summer in 2012 than we had in 2011."

He attributes the sales increase to people deciding that prices are not going to fall or rise much more so this is a good time to buy.

And the supply of bargain-priced distressed properties is declining.

Last month the number of properties foreclosed on fell to 243 from 512 a year ago, but increased from 226 in April.

Foreclosures have been falling for two years and accounted for just 16 percent of May's home sales, the center said. They peaked at 81 percent of sales in January and February of 2008.

San Fernando Valley Home Sales Leap 25 Percent in May

The number of homeowners falling behind on their mortgages declined, too.

In May, 713 owners received default notices, 13 percent fewer than 841 a year ago. Default notices also fell from 687 in April.

"The declining level is good evidence of a continuing, slow economic recovery. They are just phasing themselves out," Roberts said of defaults and foreclosures.

Prices, however, continue to wobble along.

Last month the median price of a previously owned house fell 4 percent to $370,500 from $385,000 a year earlier and slipped 2.5 percent from April.

"We have observed no pattern in housing price changes since January 2011. Housing prices have stabilized," Roberts said.

Economist William Yu, who tracks the Los Angeles area housing market for the UCLA Anderson Forecast, says the market is awakening after its deep slump.

San Fernando Valley Home Sales Leap 25 Percent in May

"We think the Los Angeles housing recovery is real but suggest that home price recovery will still be sluggish," he said.

Yu said the area's weak job growth will continue, noting that the county lost 9 percent of its job base during the recession. So far it has only recovered 2 percent of those jobs since the recession ended, he said.

And when the residential real estate sector fully recovers it won't resemble the last boom market.

"We do not expect to see runaway housing price like we did in the early 2000 s," Yu said.

greg.wilcox@dailynews.com 818-713-3743 twitter.com/dngregwilcox