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California leading US out of housing bust

KHB

California, the state that led the US into the housing “Boom and Bust” with some of the most reckless subprime mortgage lending, is now leading the way out.
A fall in new defaults in California helped push US foreclosure filings to the lowest level in almost 5 yrs, according to RealtyTrac Inc., a seller of home-loan data.

Across the country, 531,576 properties received notices of default, auction or repossession in Q-3, down 13% from a year earlier and the lowest since Y 2007, 1 in every 248 households got a filing, RealyTrac said today.

California, the home of subprime mortgage lending, saw a burst of foreclosures thanks to such industry innovations as “no-doc” loans that required no proof of income.

The state’s recovery is mirrored by US home values that rose 1.2% in July from a year earlier, according to the S&P/Case Shiller index of property prices in 20 major cities. It was the 2nd straight 12-month advance and the biggest jump for the real estate gauge since August 2010.
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The gains are moving in tandem with foreclosure declines as lenders control the flow of bank-owned homes that come to market, crimping inventory and pushing up prices, said Daren Blomquist of Irvine, California-based RealtyTrac.

Initial filings in September fell in 31 states, led by California which dropped to a 69-month low. Defaults dropped 45% from a year earlier, 34% in Arizona, 22% in Michigan and 21% in Georgia, RealtyTrac said.
Home sales in California’s biggest population centers rose in August to the highest level since Y 2006, according to real estate research firm DataQuick.

Median house and condominium prices in 6 Southern California counties rose 11% from a year earlier to $309,000, while values in 9 counties in the San Francisco Bay Area gained 11% to $410,000, the San Diego-based company said.

“Much of the pickup reflects a continuation of trends we have seen for months, like the unleashing of pent-up demand in move-up markets and high levels of cash and investor buying,” DataQuick President John Walsh said in a 13 September statement about the Southern California sales surge.

KB Home (NYSE:KBH) is seeing “dramatic improvement” in California, where strength in the coastal markets, including the Bay Area and Orange County, is spreading inland, Chairman and Chief Executive Officer Jeffrey Mezger said on a conference call with analysts last month. The West Coast is KB Home’s largest market.

“It’s simply a different market than it was 6 months ago in the Inland areas as inventories have declined significantly and prices are now rising,” Mr. Mezger said.

The Los Angeles-based homebuilder’s shares fell 1.4% today trimming its gain this year to 118%. That compares with the 75% advance for the 11-member Standard & Poor’s 1500 Homebuilding index.