Overall Foreclosures Drop in CA County But Bank Foreclosed Homes Surge

by Peter Vernon on Foreclosure Rates

Some industry experts in San Luis Obispo County, California are having a field day pointing out signs that the housing market is mending, albeit at a slow pace. They cited historically low home prices which they claimed could mean that the market has reached its bottom.

Home sales are improving brought about by the flood of buyers who took advantage of low interest rates and federal tax credits.

But the issue of the real market recovery is a cause of debate among industry experts and economists who offered conflicting opinions on when the housing market will reach the bottom. Some pointed out several factors that could hold off market recovery, including the increasing unemployment rate, new real estate appraisal rules, potential backlog of bank foreclosed homes and lingering doubts about the economic condition.

Industry experts who are cautiously optimistic about the current market situation said that many buyers are flocking to the market, taking advantage of low prices. But they are looking at the overall economic condition which they viewed as very fragile.

Senior economist Kirk Lesh of the Center for Economic Research and Forecasting at the California Lutheran University said that economic weaknesses could greatly hurt the housing market recovery in the county which has a high number of government jobs.

Lesh is anticipating an increase in unemployment this year until 2010. And he said that government workers who will get furlough would hold off buying new homes.

He added that the total foreclosure rate in the county is lower compared with other communities in California. But he is quick to point out that bank foreclosure houses rose, with 122 properties posted last month, an increase from 83 for the same month the previous year.

Other industry experts and economists said that volumes of foreclosure houses will flood the market soon as foreclosure moratoriums are lifted and banks will start to release bank foreclosed homes for sale.

Lesh said that currently, the housing market in the county could go down farther, admitting that the market has not yet reach the bottom and no dramatic increase in prices or sales are expected in the offing.

But other economists view the local residential real estate market with colored glasses, pointing out stability of home prices since March and dwindling of foreclosed houses for sale to give way to conventional home sales.