Various Authors noon, Dec. 8
Foreclosure shortage driving housing market inflation
California home prices continue to spike, according to a new report from PropertyRadar, formerly ForeclosureRadar. The research firm attributes the price increase, though, to decreased supply and a lower proportion of “distress sales,” including foreclosures and short sales.
Such distressed sales, which made up 52 percent of the overall market in May 2012, were down to 31.1 percent of the market last month, meaning almost 70 percent of home sellers had equity in their properties. The proportion of equity sellers has been rising for over a year, and made up a simple majority of overall transactions for the first time in recent memory last July.
Rising home prices helping underwater homeowners aren’t the only thing driving the trend, however – the report points to the California Homeowner Bill of Rights as key in stopping or stalling foreclosures, therefore unnaturally driving up prices due to a shortage of supply. PropertyRadar points to the fact that the overall number of sales actually dipped 0.1 percent between April and May, even though sales volume typically spikes at the approach of summer as families time their moves around the traditional school calendar.
As a result of the law, new Notices of Default, which begin the foreclosure process, had leveled out around 10,000 per month across the state. In May, they were down about 10 percent.
“The dramatic 29.7 percent year-over-year increase in California median home prices belies the fact that May sales, a month normally characterized by rising sales, declined 11.1 percent year-over-year,” said Madeline Schnapp, PropertyRadar’s director of research.