Updated: January 10, 2013 6:33AM
Five years after the collapse of the housing market nationally, the Southland is slowly emerging from the depths, but the recovery is halting and uneven, and foreclosures and short sales continue to weigh on prices.
That’s the conclusion of our story last Sunday updating the area’s market, which was hit particularly hard by the irresponsible lending practices and widespread job losses related to the Great Recession and that have caused so much heartbreak. It’s getting better but at a frustratingly slow pace.
In some south suburbs, homes have lost nearly 70 percent of their value since the housing bubble burst in 2008. They’re mostly towns toward the lower end of the socioeconomic scale, where too many residents got mortgages they could not afford and the resulting wave of foreclosures scarred neighborhoods and undercut prices.
Home prices in these communities sank so low that investors moved in to grab the “distressed” properties — the real estate industry’s term for homes in foreclosure or requiring short sales (where the mortgage is larger than the home’s value). That’s led to such homes selling well now, but there’s a downside — the investors are rehabbing the houses to lease, not sell, resulting in growing numbers of rental houses, with their issues of less maintenance and a more transient population.
Municipal officials used to discourage rental houses for those reasons, but many can no longer afford to do so. As an executive with Mack Cos., the largest landlord of single-family homes in the Southland, said town officials “would rather have a quality renter ... than an abandoned foreclosure.”
Housing prices in our more affluent communities generally have declined by no more than a third since peaking in 2007. In some of these towns, houses are also selling well, possibly because affluent sellers are better able to weather a loss on a sale. That leaves the middle market still struggling as most owners are unwilling to take a large loss on their investment.
The statistical and anecdotal information show the Southland is coming out of its housing crisis but has a long way to go. This mess didn’t happen suddenly, and it won’t end that way either.