Recent foreclosure news suggests that short sales and re-defaults from unsuccessful loan modification plans, may be misleading the severity of the foreclosure crisis in Southern California.

Los Angeles County’s median sales price of $320,000 was down 32% from December 2007, while Orange County’s median price fell 30% to $397,000. San Diego’s median price dropped 30% from December 2007, to $300,000. Ventura County’s $338,000 median December sales price was down 36% from the prior year.  Reduced sales prices drove the number of Southern California homes sold in December up by 51% over the previous year.  “It does look like the spigot is being opened a little bit, at least for low-cost home purchases,” said John Walsh, MDA DataQuick president.  The typical monthly mortgage loan payment that California homebuyers committed themselves to paying was $1,239 last month, down from a revised $1,380 for the previous month, and down from a revised $2,060 for December year ago. Read the complete LA Times article.

The reason for the real estate evaluators to be so far off their predictions was likely to due to foreclosure news.  Credit Suisse analyst Dan Oppenheim said his survey of real estate agents showed signs of dismal sales in October, but those real estate agents might have missed the foreclosures being sold by mortgage lenders and banks in bulk or through auctions in the distressed markets of Southern California, Las Vegas Nevada and most of Florida.  California short sales continued to dominate the pending real estate sales.

The better than expected pending sales are a mixed blessing. The home foreclosure sales continue to drive down prices and are taking away business from home builders and homeowners trying to sell their homes. But it does suggest that the foreclosure overhang is being whittled away, especially in the South – primarily Florida – where pending home sales were up 7.8% in October.