California Home Sales Surge

The byproduct of the subprime home mortgage problem is lots of inventory, much of it bank-owned. The banks need to sell those assets to try and stay in business, and around here home sales have suddenly perked up:

LOS ANGELES (AP) - Home sales in California surged 13.6 percent in August as a flood of foreclosures drove down prices.

The figures released Thursday by MDA DataQuick showed 37,988 new and preowned homes were sold statewide last month, up 13.6 percent from August 2007 but down 3.8 percent from July.

The firm said 46.9 percent of all homes sold last month were foreclosed properties.

That helped send the statewide median home price plunging 35.3 percent to $301,000 during the year ended in August.

Most of the foreclosed homes were located in inland regions that have taken the worst hits during the housing crisis.

It's going to be awhile before home prices recover to their previous highs, but it will happen. Southern California is still a very desirable location and eventually the demand will catch up with supply.