Southland home sales rise again as higher-cost areas awaken
August 18, 2009
La Jolla, CA---Southern California homes sold last month at the fastest clip for a July in three years and the fastest pace for any month since December 2006. The median price paid rose slightly from June – marking the third consecutive month-to-month gain – as sales in pricier coastal areas continued to rise and sales of lower-cost foreclosures waned, a real estate information service reported.
A total of 24,104 new and resale houses and condos closed escrow in San Diego, Orange, Los Angeles, Ventura, Riverside and San Bernardino counties last month. That was up 3.6 percent from 23,262 in June and up 18.6 percent from 20,329 a year ago, according to San Diego-based MDA DataQuick.
July’s sales total was 8.7 percent lower than the average number sold in July – 26,410 – since 1988, when DataQuick’s statistics begin. July home sales have ranged from a low of 16,225 in July 1995 to a peak of 38,996 in 2003.
Sales have increased year-over-year for 13 consecutive months. They’ve been driven higher by increased affordability, low mortgage rates, plentiful government-insured FHA financing for first-time buyers, robust investor demand and, more recently, improved access to the “jumbo” financing used to buy more expensive homes.
Last month the share of Southland purchase loans above $417,000 rose to 15.1 percent, the highest since it was 15.6 percent in August 2008. These “jumbo” mortgages became more expensive and more difficult to obtain after the credit crunch hit in August 2007. Before then, nearly 40 percent of Southland sales were financed with jumbo loans, then defined as over $417,000.
Although sales of lower-cost foreclosures have tapered off, the high end of the housing market has awakened this summer from a long slumber, during which sales had been at or near record lows. July sales of existing single-family houses rose above a year ago in many coastal towns, including Manhattan Beach, Redondo Beach, Huntington Beach, Newport Beach, Carlsbad, Encinitas and La Jolla. Among the higher-cost Southland communities not posting such a gain were Malibu, Rancho Palos Verdes, Beverly Hills, Brentwood and Del Mar.
Across the Southland, resales of single-family houses priced $500,000 and above rose to 20.1 percent of all existing houses sold in July, compared with a low this year of 15.0 percent in March. However, a year ago 27.2 percent of sales were for more than $500,000.
The recent shift toward more sales of higher-cost homes, in conjunction with the decline in sales of deeply discounted foreclosures, has put upward pressure on the median sale price. The median is the point where half of the homes sold for more and half for less. The dramatic declines in the median over the past two years were partly the result of the high-end housing market all but shutting down, just as resales of low-cost, inland foreclosures exploded.
Last month 43.4 percent of the Southland houses and condos that resold had been foreclosed on in the prior year – the lowest level since June 2008. July’s foreclosure resales figure was down from 45.3 percent in June and from a peak 56.7 percent in February 2009.
The median price paid for all new and resale houses and condos sold in the Southland last month was $268,000, up 1.1 percent from $265,000 in June but down 23.0 percent from $348,000 a year ago. July was the third consecutive month in which the median rose on a month-to-month basis.
“Have prices hit bottom? While some data continue to hint at that, it remains an especially risky call to make given the uncertainty over the magnitude of future job losses and foreclosures. The recent drop in foreclosure resales, coupled with the rise in high-end sales, has helped stabilize some of the regional home price measures. But there’s still quite a bit of distress out there, and plenty of unknowns with regard to how lenders and borrowers will choose to proceed,” said John Walsh, DataQuick president.
“Even if we are at or near bottom,” he added, “history suggests we could bounce along that bottom for quite a while.”
Last month’s median was the highest since it was $278,000 last December, but it stood 46.9 percent below the peak $505,000 median reached in the spring and summer of 2007.
In the region’s more affordable areas, many first-time buyers continued to choose government-insured FHA financing. Such loans were used to finance 37.2 percent of home purchases last month, up from 36.9 percent in June and 19.7 percent a year ago.
Investors and other absentee buyers, defined as those who will have their property tax bills sent to a different address, bought 19.4 percent of the Southland homes sold last month. That’s up from 15.5 percent a year ago and a monthly average since 2000 of about 15 percent. San Bernardino County had the highest share of absentee buyers in July: 27 percent.
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.
The typical monthly mortgage payment that Southern California buyers committed themselves to paying was $1,180 last month, down from $1,193 the previous month, and down from $1,710 a year ago. Adjusted for inflation, current payments are 45.7 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 56.2 percent below the current cycle's peak in July 2007.
Indicators of market distress continue to move in different directions. Foreclosure activity remains near record levels, while financing with adjustable-rate mortgages is near the all-time low but has recently edged higher. Financing with multiple mortgages is low, down payment sizes are stable, and non-owner occupied buying is above-average in some markets, MDA DataQuick reported.
Source: DQNews.com Media calls: Andrew LePage (916) 456-7157 or John Karevoll
Copyright 2009 DataQuick Information Systems. All rights reserved.