LOS ANGELES – Home sales in the Western region of the country posted a 9 percent annual increase in May as homebuyers jumped on low interest rates and falling prices, according to two reports released Tuesday.
Foreclosures and other distressed sales continued to drag down the median home sales price in the West. It tumbled more than 30 percent from May of last year to $197,700 — the biggest drop in any region. That helped pull the national median down nearly 17 percent to $173,000, the National Association of Realtors said.
Nationally, sales rose slightly from April to May, but were roughly 7 percent below year-ago levels, without adjusting for seasonal factors.
Home sales in the West have posted annual increases every month going back to at least last summer, when many first-time homebuyers and investors began snapping up sharply discounted bank-owned properties in Arizona, Nevada and California.
The foreclosure rush has helped whittle down the number of homes on the market in metros like Los Angeles and Las Vegas, where inventory has plunged by roughly half since May 2008, according to The Associated Press-Re/Max Monthly Housing Report, released Tuesday.
The trend suggests select markets could be turning around, but the recent rise in interest rates and the lingering economic dark clouds still threaten the region’s recovery.
“Yes, sales have increased and inventory has come down, but there’s still a tremendous amount of downward pressure on prices,” said Chris Heller, agent-owner of Keller Williams Realty in the northern San Diego suburb of Del Mar. “The amount of properties that are in the foreclosure process is enormous.”
Phoenix, Las Vegas, Los Angeles, San Diego and San Francisco were the only major metros in the West to register an increase in home sales last month, according to the AP-Re/Max report.
They also were among the top 10 U.S. metros to post the sharpest median price declines in May, according to the report which tallies all home sales in the metropolitan statistical area by all real estate agents, regardless of company affiliation.
Only one Western market, Anchorage, Alaska, saw its median sales price rise, but not by much — about half a percent.
Elsewhere in the region, sales declined last month Anchorage, Denver, Seattle, Honolulu, Portland, Ore., Albuquerque, N.M., Boise, Idaho, and Billings, Mont.
Neil Brooks, a real estate agent with Century 21 Arizona-Foothills in Phoenix, said his transactions were better in May than last year and June looks good too. Most of his clients are first-time homebuyers, but many are investors or homeowners looking for a vacation home. Roughly 70 percent of his sales were foreclosed homes.
“We’re still real busy,” he said, adding that most bids are for homes priced in the $200,000 range or below. “Homes in that category right now are getting multiple offers on them over the asking price.”
The median sales price in Phoenix was $119,723 in May, down about 42 percent from a year ago, according to the AP-Re/Max report. Transactions, however, were up almost 68 percent.
Buyers of higher-end homes are increasingly putting 35 percent down or more to ensure they can get financing. That’s because the cost and qualifying criteria for so-called jumbo loans — anything over $417,000 in Phoenix — has become harder to get, Brooks said.
Some of the buyers are snowbirds from as far north as Canada, like George Stroppa, who lives in Surrey, a suburb of Vancouver, British Columbia.
The college finance professor recently bought a two-bedroom, two-bath condo in the Scottsdale suburb of Phoenix.
“We’re going to use it both as a vacation home and as a longterm investment,” he said.
Like many buyers, Stroppa said low interest rates motivated him to jump into the market now rather than later. He put down 30 percent and financed the rest with a 30-year loan fixed at 4.8 percent interest.
“My specialty is finance, and when I saw that there was an opportunity to get 4.8 percent locked in for that length of time, I really didn’t hesitate,” Stroppa said.
Margarita Alvarado and her husband also seized on the low mortgage rates to buy a four-bedroom, three-bath house in the Los Angeles suburb of Whittier for $380,000.
The couple had been looking for more than a year, but were waiting for prices and interest rates to be just right. In the spring, they sensed it was time.
“The interest rates were going up a little bit and (her husband) said ‘If we don’t take advantage of getting it this low, pretty soon they’ll go up higher and it will be harder to buy,” Alvarado said.
They couple got a mortgage with a fixed rate of 4.5 percent. That brings the couple’s monthly payment to $2,200, including taxes and insurance — $300 more than they paid in rent.