Mixed results for Bay Area April home sales

May 20, 2010

La Jolla, CA.----Bay Area home sales fell slightly below the year-ago level and remained well below average last month as increased high-end activity couldn’t offset sales declines in the lower-cost areas and in the new-home market. The continued shift toward a greater portion of sales occurring in higher-cost coastal communities helped the region’s median sale price rise nearly 22 percent from last year, but the median fell from March, a real estate information service reported.

Last month a total of 7,003 homes closed escrows in the nine-county Bay Area, up 0.2 percent from 6,992 in March but down 1.9 percent from 7,139 in April 2009, according to MDA DataQuick of San Diego.

On average, Bay Area sales have risen 4.2 percent between March and April each year since 1988, when DataQuick’s statistics begin. Last month’s sales tally was 24.5 percent below the April average of 9,278 sales since 1988, and was the second-lowest for an April since 1995.

The 368 newly built homes that closed escrow in April marked the lowest new-home total for that month since April 1993, when 342 sold.

Some of April’s sales activity might have been delayed until at least May as buyers decided to take advantage of new state tax credits that became effective May 1. The credits are for first-time buyers and those purchasing a new home.

“It’s not clear how many April sales might have been pushed into May or June by tax credits. The bigger picture is that the housing market will gradually be decoupled from government stimulus and be on its own again. For months we’ve seen growing signs of a recovery taking hold. But plenty of challenges remain like high unemployment, the possibility of many more distressed properties hitting the market in a rising interest rate environment, and a dysfunctional jumbo loan market, which is a big deal in the Bay Area,” said John Walsh, MDA DataQuick president.

Buyers paid a median $370,000 for all new and resale houses and condos that sold last month, down 2.6 percent from $380,000 in March but up 21.7 percent from $304,000 in April 2009.

The median has risen on a year-over-year basis for seven straight months. But in April it was still 44.4 percent below the $665,000 peak of June and July 2007.

The April median’s nearly 22 percent increase over a year ago is largely a reflection of the changes that have occurred in buying patterns across the region. A year ago many more homes being sold were inland foreclosures – homes that were often in less-than-stellar condition, and which had highly motivated sellers. Also a year ago, sales in many high-end communities were extremely sluggish. This spring the re-selling of foreclosures has waned and high-end activity is much stronger, in part because prices have come down, there’s more inventory in some areas and it appears high-end financing has loosened a bit.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – made up 29.5 percent of the Bay Area’s resale market last month. That was the lowest since May 2008 and was down from 31.3 percent in March and 46.4 percent in April 2009. Foreclosure resales peaked at 52.0 percent in February 2009.

As less-expensive foreclosures have waned the past year, activity in many mid-to high-priced neighborhoods has picked up, helping to explain the recent double-digit annual gains in the median sale price. Last month 35.1 percent of the homes sold in the Bay Area were priced $500,000 or above, up from 27.0 percent a year ago. However, $500,000-plus sales still lag their decade-long monthly average of 46.1 percent of all sales.

Viewed a different way, zip codes in the top one-third of the Bay Area market, based on their historical prices, accounted for 31.5 percent of existing single-family house sales last month, compared with 22.9 percent a year ago. The number of houses resold in the top one-third of the market in April was 23.3 percent higher than a year ago, while house resales in the bottom one-third of the market (the least expensive zip codes) fell 26.6 percent.

High-end sales would be stronger, and the region’s overall recovery more robust, if jumbo and adjustable-rate financing were easier to obtain.

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 31.6 percent.

Use of adjustable-rate mortgages (ARMs) remains far below historically normal levels, too. ARMs made up just 11.1 percent of Bay Area purchase loans last month. While that’s the highest since ARMs were 13.7 percent of purchase loans in September 2008, it’s a fraction of the monthly ARM average of nearly 50 percent since 2000.

Meanwhile, federally-insured FHA loans have kept the entry-level market humming. The low-down-payment loans, which are popular with first-time buyers and some move-up buyers, made up 25.6 percent of Bay Area purchase loans last month. That was down from 25.8 percent a year ago but up from 14.4 percent two years ago.

Last month absentee buyers – mostly investors – purchased 18.2 percent of all Bay Area homes sold, paying a median $249,500. That’s up from 17.0 percent in March and up from 17.3 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 25.5 percent of sales in April, paying a median $260,000.

Home flipping has trended higher of late. Last month 2.6 percent of the homes that sold had previously been sold between three weeks and six months prior. That was up from a Bay Area flipping rate of 2.3 percent in March and 1.6 percent a year earlier. Last month’s flipping rates varied from 1.4 percent in San Francisco to 3.7 percent in Solano 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 $1,607 last month, down from $1,626 the previous month, and up from $1,277 a year ago. Adjusted for inflation, current payments are 39.5 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 55.3 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 but 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 Apr-09 Apr-10 %Chng Apr-09 Apr-10 %Chng
Alameda         1457 1319 -9.50% $289,197 $350,000 21.00%
Contra Costa    1,699 1,635 -3.80% $225,000 $273,000 21.30%
Marin           174 245 40.80% $585,000 $659,000 12.60%
Napa            99 104 5.10% $315,000 $335,000 6.30%
Santa Clara     1,606 1,656 3.10% $405,000 $489,000 20.70%
San Francisco   402 428 6.50% $628,500 $692,500 10.20%
San Mateo       444 556 25.20% $520,000 $580,000 11.50%
Solano          717 591 -17.60% $180,000 $202,000 12.20%
Sonoma          541 469 -13.30% $290,000 $318,000 9.70%
Bay Area        7,139 7,003 -1.90% $304,000 $370,000 21.70%

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

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

Copyright 2010 DataQuick Information Systems. All rights reserved.
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