Bay Area March home sales and median price rise above prior month and ‘09

April 15, 2010

La Jolla, CA.----Bay Area homes sold at a below-average pace again last month but sales rose sharply from February, as they normally do, to a three-year high. Sales in some lower-cost inland communities dipped below year-ago levels while they rose in many higher-cost coastal areas, helping to drive the region’s overall median sale price up by more than 30 percent from its absurdly low level in March 2009, a real estate information service reported.

Buyers paid a median $380,000 for all new and resale houses and condos that closed escrow in the nine-county Bay Area last month. That was up 7.3 percent from $354,000 in February and up 31 percent from $290,000 in March 2009 – the median’s low point for the current housing cycle, according to MDA DataQuick of San Diego.

The median has risen on a year-over-year basis for six straight months. Last month’s median was the highest since it was also $380,000 last December, but it stood 42.9 percent below the $665,000 peak reached in June and July of 2007.

The March median’s jump over a year ago was to be expected, given the pattern in recent months toward a more normal distribution of sales across the region and all price categories, which pushed the median higher. A year ago the median dived to $290,000 not just because home prices had fallen, but because the market had become extremely lopsided: Sales were unusually high in lower-cost inland areas hit hardest by foreclosures, while they were scant in many higher-cost areas.

“While March’s big annual gain in the regional median tells us a lot about what’s changed in the market, it shouldn’t be viewed as evidence of surging home values,” said John Walsh, MDA DataQuick president. “It’s a statistical quirk. A variety of data indicate prices in many communities have more or less flattened out or risen modestly, while they remain soft in others. The Bay Area is still impacted more than a lot of other markets by the years-old credit crunch. It’s tougher to get the ‘jumbo’ mortgages and adjustable-rate financing that had long been staples there.”

“Looking ahead,” he continued, “stability in the housing market will rely more heavily on a strengthening economy. Government housing stimulus is fading, and there are threats from higher mortgage rates, more distressed properties hitting the market and continued job losses.”

In March a total of 6,992 homes closed escrows in the nine-county region, up 40.2 percent from February and up 10.5 percent from 6,325 in March 2009. It’s normal for sales to rise sharply between February and March, with the increase averaging 40.0 percent since 1988, when DataQuick’s statistics begin. Last month was the first since last December to show a year-over-year gain in sales.

Last month’s sales were the highest for a March since 8,317 sales in March 2007, but still fell 22.4 percent short of the average number sold (9,016) that month since 1988.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – made up 31.7 percent of the resale market last month. That was down from 36.3 percent in February and down from 50.2 percent in March 2009. Foreclosure resales peaked at 52 percent in February 2009.

As sales of lower-cost foreclosures have tapered off over the past year, sales in many mid-to high-priced neighborhoods have picked up, helping to explain why the median sale price has posted double-digit annual gains of late. Last month 34.6 percent of the homes sold in the Bay Area were priced $500,000 or above, up from 32.6 percent in February and 24.1 percent a year ago. However, $500,000-plus sales still lag their five-year monthly average of 53.3 percent of all sales and their 10-year average of 46.0 percent.

High-end sales still suffer from a dysfunctional jumbo loan market. Mortgages above the old conforming loan limit of $417,000 made up nearly 60 percent of all Bay Area home purchase loans before the credit crunch hit in August 2007. Last month $417,000-plus loans made up 29.8 percent. Also impacting higher-end sales, the use of adjustable-rate mortgages (ARMs) remains far below the historical norm. ARMs made up just 8.7 percent of all Bay Area loans last month. While that’s the highest since ARMs were 13.7 percent of all purchase loans in September 2008, it’s just a fraction of the monthly ARM average of nearly 50 percent since 2000.

Meanwhile, the government has kept the lending spigot open for buyers of low-to mid-priced homes. Federally-insured, low-down-payment FHA loans, popular among first-time buyers, made up 24.2 percent of Bay Area purchase loans last month. That was down from 24.7 percent a year ago but up from 2.3 percent two years ago.

Last month absentee buyers – mostly investors – purchased 17.5 percent of all Bay Area homes sold, down from 19.4 percent in February and down from 18.3 percent a year ago. The monthly absentee buyer average over the past decade is 13.0 percent. Buyers who appeared to have paid all cash – meaning there was no corresponding purchase loan found in the public record – accounted for 24.7 percent of sales in March.

Home flipping has risen in recent months but eased in March. Last month 2.3 percent of the homes that sold had previously been sold between three weeks and six months prior. That was down from a flipping rate of 2.6 percent in February but up from 1.6 percent a year ago. Last month’s flipping rates varied from 1.8 percent in San Mateo and Santa Clara counties to 5.2 percent in Napa County.

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 were estimated in Alameda and San Mateo counties.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $1,626 last month, up from $1,501 the previous month, and up from $1,245 a year ago. Adjusted for inflation, current payments are 38.5 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 54.5 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, with default notices on the rise again in some areas, though they remain well below peak levels reached over the last two years. Financing with multiple mortgages is low, down payment sizes are stable, and non-owner occupied buying is above-average, MDA DataQuick reported.


Sales Volume Median Price
All homes Mar-09 Mar-10 %Chng Mar-09 Mar-10 %Chng
Alameda         1216 1506 23.80% $280,000 $360,000 28.60%
Contra Costa    1,639 1,412 -13.80% $220,000 $275,000 25.00%
Marin           161 225 39.80% $585,000 $640,000 9.40%
Napa            124 136 9.70% $339,000 $327,500 -3.40%
Santa Clara     1,288 1,602 24.40% $390,000 $500,000 28.20%
San Francisco   332 500 50.60% $608,000 $675,000 11.00%
San Mateo       380 485 27.60% $506,000 $615,000 21.50%
Solano          722 660 -8.60% $180,000 $215,000 19.40%
Sonoma          463 466 0.60% $304,100 $318,000 4.60%
Bay Area        6,325 6,992 10.50% $290,000 $380,000 31.00%

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

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

Copyright 2009 DataQuick Information Systems. All rights reserved.
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