We too often forget that the housing bust is good for a lot of people, namely those who can now actually afford to buy a house that’s not crazily overpriced.

The Los Angeles Times reports on how buyers in Santa Ana, California, are reaping the benefits of their neighbors’ woes and sparking a boom in home sales there.

Last month Maciel paid a bit under $270,000 for a two-bedroom, 910-square-foot house. It had previously sold for $504,000 in 2006 and was foreclosed upon in July.

All told, 357 homes in Santa Ana were in escrow in October, almost 10 times the volume of a year ago.
They’re selling fast because they’re cheap. They’re cheap because there have been so many foreclosures.
About 80% of houses for sale at the end of October in the city had been foreclosed upon, were in default or were listed for sale at less than their mortgage amount…

The Times is good to warn its readers that just because they bought a house for half off doesn’t mean it might not lose some value before the market stabilizes.

Experts caution that Lee’s loft and Maciel’s home may still lose value, despite the steep drop in prices in the area. Houses in town continue to slip into foreclosure, and unemployment rates are rising throughout Orange County.

More defaults and foreclosures are likely as adjustable-rate mortgages reset to higher rates next year, Chapman University economist Esmael Adibi said. That means the inventory of unsold homes will continue to climb, while the ability of people to buy may decline.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.