From the Calculated Risk blog:
Southern California home sales outpaced last year for the fifth consecutive month in November, when 55 percent of buyers in the resale market chose repossessed homes. The abundance of discounted foreclosures helped push the median sale price down a record 35 percent from a year ago, a real estate information service reported.The median is dropping fast because the mix has changed to lower priced homes. This mix change is because of all the foreclosures at the low end, and also because jumbo loans are very expensive - limiting home buying at the mid and high end in SoCal. As I've noted before, the Case-Shiller repeat sales index is a better measure of price movement because it isn't distorted by changes in the mix.
"Bargains and bargain hunters have kept this market alive through some of the bleakest financial news in memory. There's this renewed sense that you can score a 'deal' - something that had been missing for many years. Last month's Southland sales weren't great, given they were the second-lowest for any November in 16 years. But they could have been a lot worse," said John Walsh, DataQuick president.That is a key point - the chain is broken - there is no move-up buyer.
"Many first-time homebuyers are, understandably, cheering as foreclosures dominate sales, tugging down prices and raising affordability," he continued. "For home sellers and the industry, though, one concern over foreclosures representing half of all sales is that those transactions simply repay lenders. They don't trigger a move-up purchase."