January 27, 2009 in Business

Preowned-home sales climb in West thanks to discounts

Foreclosures help power deals
Associated Press
Associated Press photo

A sold sign is shown in Palo Alto, Calif. Preowned home sales in December climbed 8.4 percent from November, even in metropolitan areas where foreclosures have lagged those of many other major markets in the United States.
(Full-size photo)

Local numbers

 Although existing home sales nationwide were up slightly in December over the same month in 2007, sales were down in Spokane County, according to the Spokane Association of Realtors. December 2008 sales in the county totaled 285, down from 460 a year earlier.

 Sales volume in 2008 sagged 31 percent, to $1.01 billion, compared with the previous year. There were 4,911 houses sold in Spokane County, compared with 6,935 in 2007, a 29 percent decline.

Deep discounts on foreclosed homes helped power sales of preowned homes in the Western U.S. in December, with metro areas in California, Nevada and Arizona leading the way, according to two reports released Monday.

In all, about 90,000 existing homes and condos were sold in December in the 13-state region. Without adjusting for seasonal factors, sales were up 36.4 percent from the same month in 2007, according to the National Association of Realtors.

The region’s sales climbed 8.4 percent from November’s total, as many homebuyers seized on bargain-priced homes, even in metros such as Seattle where foreclosures have lagged those of many other major U.S. markets.

“People are just not able to make their payments … The banks are taking over the properties and putting them on the market,” said Gary DeRosa, a real estate agent with ZipRealty Inc. in Seattle.

Since last summer, distressed home sales have made up an increasing slice of preowned home sales across once high-flying markets in California, Nevada and Arizona. That trend continued in December, helping to bring down the median home price across the West by 31.5 percent from the previous year to $213,100, the association said.

Nationally, existing home sales rose about 1 percent from December 2007, while the U.S. median home price slid 15.3 percent to $175,400.

Las Vegas, Los Angeles, Phoenix, and San Diego were among the top five major metro areas in the country to register an increase in home sales last month, according to the Associated Press-Re/Max Monthly Housing Report, released Monday. The data includes all home sales recorded in the metropolitan statical areas by all local agents, regardless of company affiliation.

Those Western cities, plus San Francisco, ranked among the top 10 metros to post the steepest median price declines in the nation last month, with Phoenix and Los Angeles behind only Detroit.

Existing home sales in Las Vegas soared about 82 percent in December from a year earlier. The median home price dropped by about 35 percent from the prior year to $162,487, according to the AP-Re/Max report.

In Seattle, would-be buyers remained more cautious last month.

Sales plunged about 35 percent versus December 2007, but ticked up 9.8 percent from November’s total. The metro’s median home price fell 7.8 percent last month to $329,900 from the prior year, but edged up 2.6 percent from November, according to the AP-Re/Max report.

ZipRealty’s DeRosa said his sales remained at about the same pace as they were last year, while January’s sales appear on track to be better than a year ago, he said.

Some sellers are also coming up against obstacles during the appraisal process.

“We can reach mutual agreement between buyers and sellers on a purchase, but the appraiser may come in and say, ‘I can’t support this agreed purchase price’ … which creates a gap,” DeRosa said.

When that happens, sellers are left with little choice but to lower their price in line with the appraisal.

“That’s becoming more and more of a concern,” DeRosa said.

Melanie Robbins was among the longtime renters in the Seattle area who seized on the rise in discounted, bank-owned properties to buy a home.

Robbins, 33, closed last month on a two-bedroom, one-bath house that she first spotted listed at $236,000 in October. The 780-square-foot home was repossessed by the bank and Robbins scooped it up for $199,000.

“That was in my price range, so I went ahead and went for it,” said Robbins, an optician. “It’s a fixer-upper, but a nice little property in a good neighborhood.”

Robbins said she isn’t worried about losing her job, something that may be keeping other prospective buyers away. Last week, Microsoft Corp. said it will cut up to 5,000 jobs over the next 18 months.

“I feel very secure in my field,” she said. “I’m lucky that I’m in a field that’s looking like it’s not going to be hurt so much.”

Robbins had been looking for a home since last summer, but put it off, patiently waiting for prices to fall to a level she could afford.

The bank covered around $5,200 in closing costs and she pitched in $2,000 out of her savings, but she financed the home with two loans – including one that lets her only make interest payments the first three years.

“It’s to help make the payments reasonable for me,” she said.

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