In both cities, the price per square foot fell, and the percentage of deals involving distressed properties — foreclosures or homes with owners in default — rose by more than 10%.
Sorem said foreclosed homes are often in poor shape, driving down prices on comparable properties. The fact that those deals are a growing percentage of local transactions is a sign that prices likely will remain soft in the foreseeable future, he said.
“Properties are coming on the market, not because people are moving, but because they can’t afford to stay there,” Sorem said.
The percentage of short sales, in which lenders allow owners to sell the homes for less than what they owe on the mortgage, has increased in Burbank and Glendale. But agents say closing those deals remains difficult.
While agents say banks have been more flexible with short sales in the last year to avoid the lengthier foreclosure process, they are still slow to process the deals, causing buyers to walk away.
“Three out of five short sales just don’t close,” said Lani McKennon of Burbank’s House of Realty.”You leave body parts behind getting a deal into escrow.”
Sorem and McKennon said cash investors are the most active buyers in the local market, acquiring bank-owned properties, fixing them up and then re-listing them at a higher price or renting them while they await better market conditions.
Glendale agent Harry Hull of Hull Homes said unemployment rates, which hover around 10% in Glendale and Burbank, continue to make buyers scarce and hesitant. Despite that, Hull said, prices in Glendale, Burbank and the foothills are holding up better than elsewhere in the region, and some homes are receiving multiple offers.
“The takeaway is, yes, things are down some. But certainly if you are a seller and you want to get it sold, make it look good and get the price right, and you’ll have a sale,” he said.
In the La Crescenta-Montrose area, the average sale price fell from $685,000 in May 2010 to $559,000 in May 2011, according to Sorem’s data.
In La Cañada Flintridge, the average sale price increased from $1.32 million to $1.36 million, though the number of sales fell from 25 this time last year to 13 last month.