Bay Area home sales hit 4-year high; median price up again

August 21, 2009

La Jolla, CA.----Bay Area home sales rose last month to the highest level for a July in four years as deals above $500,000 continued to accelerate. The median sale price climbed above the prior month for the fourth consecutive month, lifted by the combination of more high-end transactions and fewer sales of lower-cost, lender-owned foreclosures, a real estate information service reported.

The median price paid for a home in the nine-county region rose to $395,000, up 12.2 percent from $352,000 in June, but down 16.0 percent from $470,000 in July 2008, according to MDA DataQuick of San Diego.

Although last month’s median was 36.2 percent higher than the current cycle’s low of $290,000 in March this year, it was still 40.6 percent below the peak $665,000 median reached in June and July of 2007.

The median’s $43,000 gain between June and July was mainly the result of a shift toward a greater portion of sales occurring in higher-priced neighborhoods. The trend has been fueled this summer by several factors, including: More distress in high-end areas, leading to more motivated sellers; more buyers sensing a bottom could be near; and increased availability of larger home loans, which had become more expensive and far more difficult to obtain after the credit crunch hit two years ago.

Loans above $417,000 accounted for 30 percent of Bay Area home sales last month – the highest since they represented 31.9 percent of sales in August 2008. Before the August 2007 credit crunch, such “jumbo” loans over $417,000 represented more than 60 percent of sales.

In another sign of a gradual comeback in home financing, the percentage of Bay Area homes purchased last month with an adjustable-rate mortgage rose to 6.6 percent – up from a record low of 3.0 percent in January 2009. The median sale price for homes purchased with those adjustable-rate loans last month was $766,500, while the median loan amount was $523,500. Adjustable-rate mortgages averaged about 61 percent of all Bay Area purchase loans this decade up until the credit crunch, after which they began to dry up quickly.

Sales of $500,000-plus existing single-family detached houses rose to 35.6 percent of all house resales last month, up from 34.1 percent in June and up from a low this year of 22.7 percent in January. Last month’s $500,000-plus sales were the highest since they were 38 percent of sales last September.

As high-end sales have taken off in recent months, sales of foreclosures in less-expensive inland areas have tapered off. Last month 34.2 percent of the Bay Area homes that resold were foreclosure resales – homes resold in July that had been foreclosed on in the prior 12 months. Last month’s foreclosure resale level was the lowest since it was 33.3 percent in July 2008. Foreclosure resales peaked at 52 percent of all Bay Area resales in February this year.

The drying up of the lower-cost foreclosures helps explain why July sales of sub-$300,000 existing single-family houses dropped to 37.8 percent of house resales. That was down from a high this year of 48.9 percent of resales in March.

“In the San Francisco Bay Area and across California we continue to see the market moving gradually back toward a more normal balance of sales across all price ranges. The high end of the market finally has a pulse and that has led to a swift rise in the median sale price. It’s the opposite of what we saw two years ago, when the credit crunch slammed the brakes on jumbo lending and sales of more expensive homes screeched to a halt. That triggered a near free-fall in the median sale price,” said John Walsh, MDA DataQuick president.

“Evidence is mounting that in some areas we’ve approached at least a soft bottom for home prices,” he said. “But we continue to view that possibility with an abundance of caution, given all of the uncertainty over future foreclosure inventories and ongoing job cuts. The market remains vulnerable.”

A total of 8,771 new and resale houses and condos sold in the nine-county Bay Area last month. That was up 1.5 percent from 8,664 in June and up 15.6 percent from 7,586 in July 2008.

Although last month’s sales were the highest for the month of July in four years, and the highest for any month since August 2006, they were still 7.8 percent lower than the average of 9,512 homes sold during the month of July going back to 1988, when DataQuick’s statistics begin. July sales have varied between a low of 6,666 sales in 1995 and a peak of 14,258 in 2004.

San Diego-based MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. MDA DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Because of late data availability, sales counts were estimated in Alameda and San Mateo counties.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $1,739 last month, up from $1,585 the previous month, and down from $2,359 a year ago. Adjusted for inflation, current payments are 33.7 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 51.0 percent below the current cycle's peak in July 2007.

Indicators of market distress continue to move in different directions. Foreclosure activity is off its recent peak but remains high by historical standards, while financing with adjustable-rate mortgages is edging higher but remains low, as does financing with multiple mortgages. Down payment sizes are stable and non-owner occupied buying activity is above-average in some markets, MDA DataQuick reported.

 

Sales Volume Median Price
All homes Jul-08 Jul-09 %Chng Jul-08 Jul-09 %Chng
Alameda         1,428 1,780 24.6% $440,000 $340,000 -22.7%
Contra Costa    1,730 1,888 9.1% $350,000 $261,000 -25.4%
Marin           277 265 -4.3% $770,000 $650,000 -15.6%
Napa            125 134 7.2% $440,000 $342,500 -22.2%
Santa Clara     1,660 2,199 32.5% $585,500 $490,000 -16.3%
San Francisco   609 543 -10.8% $749,000 $642,426 -14.2%
San Mateo       648 692 6.8% $670,000 $574,750 -14.2%
Solano          592 715 20.8% $275,000 $200,000 -27.3%
Sonoma          517 555 7.4% $362,500 $328,000 -9.5%
Bay Area        7,586 8,771 15.6% $470,000 $395,000 -16.0%

Source: MDA DataQuick Information Systems, www.DQNews.com

Media calls: Andrew LePage (916) 456-7157 or John Karevoll (909) 867-9534

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