Home sales are up prices are down mortgage rates rock-bottom. By most historical measures, this looks like the ideal time to take the plunge and buy a house in Southern California.
In “Time to Buy?” we go behind the latest housing facts and figures to try and find out what’s really going on in the housing market. It turns out that the situation is even more volatile and complex than the shifting columns of sales prices and percentage changes would indicate. What SoCal Connected dubbed “Foreclosure Alley” now looks like “Auction Alley,” as hundreds of foreclosed houses get auctioned off to bidders who are snapping them up often at unheard-of prices in the low five-figures.
Some of these new buyers - like drug company sales rep Marion Watson - are Californians that are finally able to afford a home after years of watching prices go into the stratosphere. But the biggest group of buyers in this post-bubble era is a new breed of real estate investors. We travel with a bus tour of these wannabe investors as they inspect foreclosed properties in South L.A. They’re looking for houses they can purchase at a low price, re-hab, and turn into rentals. And who will they be renting to? Foreclosed homeowners whose financial woes have shut them out of the market.
But while sales are way up in the low end of the market, the numbers of homesellers in the high-priced zip codes has dropped precipitously. They’re not willing to sell their homes at the highly discounted prices that are being offered. With sales in these areas slow, real estate agents who’ve worked these markets have had to find new sources of income. In 2006, California Connected filmed Mike Mandekic as he checked up on multi-million dollar homes he was selling in Beverly Hills. In 2009, we filmed him in San Fernando, where he was selling a foreclosed home on a working-class block. It takes five to ten sales of houses like this to match the profit he used to make from one Beverly Hills sale. But some experts believe that homeowners in the high end areas may soon face a day of reckoning. If job losses continue, they too may be forced to sell at lower prices than they’d hoped to, driving down home values in areas that have so far hung on.