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Housing market continues to slide

Average sale prices are down

more than a third of sales are distressed properties.

July 15, 2011|By Mark Kellam, mark.kellam@latimes.com

Another slump in local residential sale prices in June indicates a stubbornly soft market during a time of year when real estate activity usually is surging.

The average sale price of a Glendale home in June was $515,784, down from $533,671 the same time last year, according to statistics compiled by Keith Sorem, an agent with Glendale Keller Williams. There were 61 pending sales at the end of June, one more than in June 2010.

In Burbank, the average sale price was $453,218 in June, compared to $493,478 a year earlier, and the number of pending sales took a tumble, from 47 to 38.

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The percentage of deals involving bank-owned properties fell in Burbank by about 4.5% and dipped only 0.5% in Glendale.

Short sales, in which lenders let owners sell their homes for less than what they owe on the mortgage, jumped by about 12% in Glendale, but dropped by 3% in Burbank.

At the same time, the number of new listings grew modestly in Glendale, La Cañada Flintridge and the La Crescenta-Montrose area, but decreased in Burbank, from 88 to 70.

The one silver lining: Even though more than one-third of sales were distressed properties — bank-owned homes or short sales — prices have remained relatively steady compared to last year, Sorem said, declining just only $4.69 per square foot in Glendale and $22.77 in Burbank.

“That’s pretty amazing,” he said.

John Maseredjian, director of business development at John Hart Real Estate in Glendale, said more homeowners are opting for short sales because they see so many loan modifications fail.

“They figure they should get out of the situation before it gets worse,” he said.

But the housing market could go from lackluster to dismal later this year if U.S. legislators fumble on some critical decisions, Sorem said.

When the economy took a nosedive, Congress raised the residential loan limit on government-backed loans to $729,000, up from $417,000. Homebuyers pay a higher interest rate on loans above the limit.

On Sept. 30, the loan limit is set to drop to $615,000, which would hurt sales of larger homes, Sorem said.

Proposed legislation would require a 20% down payment on all government-backed home loans, keeping many prospective buyers out of the market, he said. Currently, some loans require down payments of as little as 3.5% and many others require anywhere from 5% to 15% down.

“It’s going to get ugly,” Sorem said. “If you take that many buyers out of the picture, values are going to drop like a rock.”

In the La Crescenta-Montrose area, the average sale price was $541,042 last month, down from $573,331 last year, but pending sales enjoyed a big spike, from 26 in June 2010 to 53 last month.

In La Cañada, the average sale price jumped from $1.38 million to $1.46 million, and the number of pending sales rose from 13 to 14.
 
 

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