Early signs of housing recovery in Los Angeles
(CBS News) LOS ANGELES - The housing market is heading into the spring selling season stronger than last year. While sales of existing homes slipped 0.9 percent in February, they were still 8.8 percent higher than a year ago. Home prices held steady last month but are down roughly 10 percent since last June.
In Los Angeles, there are some early signs of a housing recovery. CBS correspondent Ben Tracy tells us that, in one neighborhood, bidding wars and house flippers are back for the first time since the bubble burst.
Adam Bauer bought his house in Los Angeles 10 months ago with his brother Logan. They paid $10,000 more than the asking price.Home prices sink to 2002 levels
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"I had no concerns. It just really felt good," said Bauer. "You can't go down any street without seeing a change or a home that is under rennovation."
Their house in the Highland Park neighborhood is the work of flippers, investors who buy houses in foreclosure, fix them up and sell them.
"Just on our street alone, there have been eight homes that have flipped since we moved in," said Bauer.
Just a year ago, only 13 percent of the homes sold in Highland Park were bought by investors; this January, 43 percent of the homes on the market were bought by flippers.
Nationwide investors accounted for 23 percent of home sales last month attracted by low prices and record low interest rates.
House flipper Matt Manner bought a foreclosed home in Highland Park and sold it for a $90,000 profit.
"We sold 17 last year and we have 12 in the works," Manner said. "We plan on doing 24 to 30 this year."
During the housing bubble, flippers helped inflate prices. Now they are helping to stabilize home values.
They are also luring first-time buyers who are essential to a housing market recovery. But the flippers are making it harder for people to sell homes that have not been redone.
"Prices have already gone up so we would not be able to purchase this house today for what we paid for it," Bauer said.
That's something the housing market has not seen in years.
But even lthough sales are stronger than a year ago, even after the gains, the pace is far below the 6 million that economists equate with healthy markets. And the makeup of those sales still signals a troubled market.
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