Southern California home sales inch up; median price steady

October 13, 2009

La Jolla, CA---Southland home sales edged higher last month, bolstered by late-closing summer transactions, low mortgage rates and buyers hoping to take advantage of a soon-to-expire tax credit. The region’s median sale price remained lower than in September 2008 but, for the first time in years, several counties logged year-over-year gains in the median price paid for resale houses, a real estate information service reported.

Last month 21,539 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. That was up 0.2 percent from 21,502 in August and up 5.1 percent from 20,497 a year earlier, according to MDA DataQuick of San Diego.

September marked the 15th month in a row with a year-over-year sales gain, although last month’s was the smallest of those increases. Sales for the month of September have averaged 24,873, ranging from a low of 12,455 in September 2007 to a high of 37,771 in 2003, based on DataQuick’s statistics, which go back to 1988. Last month’s sales were the highest for a September since 2006, when 24,195 sold.

The small uptick in September sales from August was atypical. On average, sales have fallen 9.5 percent between those two months.

“There were more than just normal, seasonal forces at work in these September sales numbers. More attempts at short sales, which typically take longer, and new appraisal rules no doubt delayed some deals this summer, causing them to close in September rather than August. September probably also got a boost from people opting to buy sooner rather than later to take advantage of the federal tax credit for first-time buyers, which is set to expire next month,” said John Walsh, MDA DataQuick president.

The median price paid for a Southland home was $275,000 last month, the same as in August but down 10.9 percent from $308,500 in September 2008. It was the median’s smallest year-over-year decline for any month since November 2007, when it dipped 10.3 percent from a year earlier.

The region’s overall median sale price has risen or held steady on a month-to-month basis ever since it dropped to a more-than 7-year low of $247,000 in April. The median peaked at $505,000 in mid 2007.

Three Southland counties saw small year-over-year gains last month in the median price paid for resale single-family detached houses. Orange County also posted a small annual gain – 0.9 percent – in its overall median price, the first for any month since August 2007, when it rose 1.9 percent.

Orange County’s 4.2 percent year-over-year increase in its resale house median last month was also the first for any month since August 2007, when that median rose 3.6 percent. San Diego County’s median price paid last month for resale houses rose 1.5 percent from a year ago, the first annual gain since August 2007, when it rose 0.9 percent. Ventura County’s September resale house median rose 2.2 percent - the first year-over-year increase since October 2006, when it climbed 1.3 percent.

Recent month-to-month and year-over-year gains in the median sale price stem largely from a substantial market shift in recent months: There have been fewer sales of foreclosed homes in lower-cost neighborhoods, and more sales in higher-cost areas.

Foreclosure resales – houses and condos sold in September that had been foreclosed on at some point in the prior 12 months – made up 40.4 percent of all Southland homes resold last month. That was down slightly from a revised 41.7 percent foreclosure resales in August and down from a high of 56.7 percent in February this year.

As sales of lower-cost foreclosure resales have tapered off, sales of higher-cost homes have risen. Last month sales of $500,000-plus homes accounted for 21 percent of resale single-family house transactions, up from a low this year of 13.4 percent in January.

Although the financing environment for pricier homes appears to have improved in recent months, the “jumbo” loans that many high-end buyers require remain relatively expensive and difficult to obtain.

Mortgages above $417,000 – formerly the definition of a jumbo loan – made up nearly 40 percent of Southland purchases before the credit crunch hit two years ago. Last month they accounted for 15.1 percent, though that was up from a 2009 low of 9.3 percent in January and 13.3 percent a year ago.

The use of adjustable-rate mortgages (ARMs), often used for high-end purchases, has risen lately but remains far below normal. Over the past two decades ARMs accounted for nearly 40 percent of all home purchase mortgages. Last month ARMs made up 4.1 percent of purchase loans, up from 3.9 percent in August and a record-low 1.9 percent this April. A year ago ARMs were 7.2 percent of purchase loans; three years ago they were 71.2 percent.

A common form of financing used by first-time buyers in more affordable neighborhoods remained near record levels. Government-insured FHA mortgages made up 36.4 percent of all home purchase loans last month, down from 37.4 percent in August but up from 32.7 percent a year ago.

MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. 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 Southland buyers committed themselves to paying was $1,189 last month, down from $1,207 for August, and down from $1,486 in September a year ago. Adjusted for inflation, current payments were 46.3 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They were 56.0 percent below the current cycle’s peak in July 2007.

Indicators of market distress continue to move in different directions. Foreclosure activity remains high by historical standards. 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.

	Sales Volume			Median Price
All homes	Sep-08	Sep-09	%Chng	Sep-08	Sep-09	%Chng
Los Angeles	6,274	7,138	13.8%	$360,000	$330,000	-8.3%
Orange	2,667	2,828	6.0%	$425,000	$429,000	0.9%
Riverside	4,551	4,312	-5.3%	$237,500	$185,000	-22.1%
San Bernardino	2,831	3,023	6.8%	$205,000	$150,000	-26.8%
San Diego	3,366	3,454	2.6%	$328,000	$325,000	-0.9%
Ventura	808	784	-3.0%	$385,000	$371,750	-3.4%
SoCal	20,497	21,539	5.1%	$308,500	$275,000	-10.9%