Fewer homes sold in February in Los Angeles County than in any month in more than three years.
The 3,661 homes that sold in February represented a drop of 31 percent from the same month a year ago, according to HomeData Corp. HomeData, of Melville, N.Y., tracks housing prices nationally and has been providing local data to the Business Journal each month for more than three years.
“We probably haven’t seen this since about 1999,” said Delores Conway, director of the Casden Real Estate Economics Forecast at the USC Lusk Center for Real Estate. “On the other hand it has been lower, for example during the 1991 recession.”
Nevertheless, the implosion in the subprime lending market last week does not bode well for the national or local housing markets. Santa Monica-based Fremont General Corp. suddenly closed down its subprime unit due to bad loans that prompted regulators’ attention. And there were concerns that Irvine-based New Century Mortgage Corp. could be forced into bankruptcy, though those fears eased somewhat as the week progressed as buyers expressed interest in taking over the ailing units.
And Conway said the inevitable tightening of credit terms that has followed problems in the housing market has made it more difficult for some prospective homebuyers to qualify for loans. As a result, these people have been “taken out of the market,” helping to explain the volume declines of the last few months.
There is also a widespread consensus that the strength of the local economy should prevent any collapse in the housing market, as occurred in the first half of the 1990s due to federal defense cuts that decimated the local aerospace sector.
The county unemployment rate was just 4.6 percent in January and showed strength in a variety of sectors, according to the state Employment Development Department.
“We are starting to see an increase in foreclosures but as long as the job market remains healthy, then we expect the markets to be able to adjust,” Conway said.