House sales drop dramatically in Southern California

May home sales were down almost 17.5 percent from 2010 levels in Southern California, according to DataQuick statistics released today. Sales in Los Angeles declined 18.30 percent and San Diego was down 20.40 percent.

At $280,000, the median price of sold properties was down 8.2 percent from May 2010. More than half of all sales were foreclosures or short sales.

The bad year-over-year comparison owes something to the fact that last year's market was goosed by a homebuyer's tax credit, DataQuick president John Walsh noted in a company press release.

However, housing markets in other parts of the country have not seen the same kind of drop off as Southern California. The Minneapolis Area Association of Realtors recently announced that compared to last year, May sales were up.

Walsh said that rising employment or a further decrease in home prices might perk up the California market. But falling home prices would likely distress the many homeowners with underwater mortgages in the region. According to a recent CoreLogic report, more than a third of California mortgages were upside-down at the end of the first quarter of 2011.