Following yesterday's news that the median price of a Southern California home had dropped below $400,000, the Los Angeles Times looks at the impact the foreclosure market is having on the rest of the market, reporting that 38 percent of Southern California homes sold in March had been foreclosed at one point in the last year. That figure may be offset by counties such as Riverside (where 50 percent of all sales were foreclosures), but the reality is that real estate agents in Los Angeles are telling stubborn sellers (who refuse to come down on price), to reduce their listing prices given that the foreclosure market is now the "competition." But if foreclosures are driving down listing prices, is that a healthy way to correct the market? Aren't all these foreclosures going to bite us in the ass in another way? Perhaps. Add in the recession and the plunging job market, and it's all one perfect storm, according to the paper. Meanwhile, the Times gets a sound bite from a UCLA economist.
"If there is a silver lining to that cloud, it may be the astonishing rate at which prices are plunging, said UCLA economist Edward E. Leamer. That might get the market to hit bottom sooner, he reasons, so a recovery can begin. 'Lower prices are part of the adjustment that has to be made,' he said." · Foreclosure glut further depresses housing prices [LA Times]