Los Angeles Foreclosures for Sale Slow as Banks Held Back

by on cities

Los Angeles foreclosures for sale slowed in October as banks held off pursuing foreclosure actions on defaulting mortgages and complied with state moratorium and federal loan modification programs.

According to Christopher Thornberg, founder of Los Angeles real estate consulting firm Beacon Economics, around 15 percent of mortgage loans in California are in default, but banks have been reluctant in proceeding with foreclosures because of the expected adverse effects of another wave of foreclosures on price levels and on the whole housing sector, which has been showing signs of recovery.

Thornberg said that eventually, these distressed properties will enter the market, indicating the reality that the current rise in home prices and sales are artificial.

Los Angeles home prices increased in October, with the price median rising from September by $5,000 to $340,000, according to data from HomeData. Total home sales dropped by around 1.2 percent, the second consecutive month that sales declined.

There are areas however in the county where home sales soared. In Palos Verdes, total sales shot up by 533 percent. Sales also soared in Signal Hill, Maywood, Exposition Park and Culver City.

Analysts in the area said that first time home buyers taking advantage of the federal tax credit and lower-priced Los Angeles foreclosures for sale contributed largely to the increased sales in these areas.

Robert Foster of Coldwell Banker in Los Angeles, said sales increases occurred in both the low-end and high-end of the housing sector. He added that there were substantial price increases in South Park and in Topanga.

Paul Habibi, real estate professor at the University of California in Los Angeles, affirmed Thornberg’s analysis that government policies are propping up the housing market. Habibi contended that the government will have to support the market for a longer time because of the unemployment situation.

So far, there are signs of home price improvements in Los Angeles and in other U.S. cities. As discussed in a recent report released by Standard & Poor’, Los Angeles was among ten cities where house prices improved.

However, in a report released this week, the National Association of Realtors pointed out the decrease in prices of previously owned homes in 80 percent of the country’s metro areas in the third quarter. NAT cited short sales and foreclosure sales, which comprised almost one-third of all home sales during the quarter, as the key factors for the price declines.