Home sales rebound lifts hard-hit California county

By Syantani Chatterjee

WINCHESTER, California (Reuters) - It may be just a blip in the housing downturn, but even a temporary rebound in home sales is a welcome respite for California's Riverside County, one of the places hardest hit in the U.S. mortgage and foreclosures crisis.

Thanks to plummeting prices and a slew of foreclosures in the county, east of Los Angeles, 31-year-old photographer Elizabeth Luma can see her dream of owning a home in Southern California come true. She is scouting for a $200,000 home for her five-member family.

"The range of homes is low enough, so we can pay for it right now," said Luma, who rents an apartment in Los Angeles and plans to close the deal on a Riverside house within the next month.

"Right now is the time for first-time buyers like us who couldn't afford it earlier to take advantage of the low prices."

In June, Riverside County saw the number of home sales jump 12 percent from last year, even as overall sales in the six Southern California counties, including Riverside, were down 14 percent, according to DataQuick Information Systems.

Prices in June were down 31 percent from a year earlier year in Riverside, which is ranked second in the country for foreclosure rates behind Stockton in Northern California.

Tera Wunderlich, a 27-year-old hairdresser who has been planning to buy a house for years, is going to make the most of those numbers.

"My budget is roughly $200,000 and I know there are bank-owned properties to look at," Wunderlich said.

This current uptick in home sales is fueled by buyers like Wunderlich and Luma who intend to live in the homes they buy, and also by investors who are building a portfolio of rental properties, real estate experts say. Speculators who "flip" properties for a profit and who were blamed for worsening the mortgage crisis are less prevalent.

"Flippers who depend on a home-price appreciation to make money can't really make any money because there is no appreciation, and there won't be for years," said Christopher Thornberg, principal and cofounder of economic consulting firm Beacon Economics.

FORECLOSURES DRAW BARGAIN-HUNTERS

Rows of once-luxurious properties that now lie foreclosed are bringing down home prices in entire neighborhoods in the county. Foreclosed homes accounted for more than 62 percent of homes sold in June.

"The sales are being driven by foreclosed properties, and bargain-hunters will of course take advantage of that," Thornberg said.

That has encouraged first-time home buyers, and to a lesser degree, move-up home buyers, to come back into the market, according to local real estate agents.

But not all is bright for these buyers. Credit is hard to come by in a mortgage market burned by defaults, even for those who have stable income and downpayments.