Bay Area June Home Sales Send Mixed Signals

July 15, 2010

La Jolla, CA.----The number of Bay Area homes sold last month inched up from May but fell short of a year ago as the impact of the federal home buyer tax credits began to fade. The median sale price remained 16.5 percent higher than last year, thanks largely to fewer foreclosures re-selling and more high-end activity, a real estate information service reported.

Last month a total of 8,373 homes closed escrows in the nine-county Bay Area, up 1.3 percent from 8,264 in May but down 3.1 percent from 8,644 in June 2009, according to MDA DataQuick of San Diego.

On average, Bay Area sales have risen 3.9 percent between May and June since 1988, when DataQuick’s statistics begin. Last month’s sales were the third-lowest for a June – behind 2008 and 2007 – since June 1995, when 7,780 sold. Last month’s sales were 17.9 percent lower than the average June sales tally – 10,198 – since 1988.

“The next few months should be very interesting: We’re about to see how well the housing market can fly on its own. The tax credits no doubt stole some demand from the rest of this year, and soon we’ll have a better sense of just how much,” said John Walsh, MDA DataQuick President.

“The Bay Area market is getting a boost from super-low mortgage rates and a slightly friendlier lending environment for high-end borrowers,” he added. “But, barring new government stimulus, the housing market will be relying very heavily on improvements in the economy. A lot will depend on how many people find jobs, or stop worrying about losing the one they have.”

Last month the median paid for all new and resale houses and condos combined was $410,000, the same as in May and up 16.5 percent from $352,000 in June 2009.

The median has risen on a year-over-year basis for nine straight months, though in June it was still 38.3 percent below the $665,000 peak in June/July 2007. The post-boom low was $290,000 in March 2009. The median’s peak-to-trough plunge was caused by a decline in home values as well as a huge shift in sales toward lower-cost homes, especially inland foreclosures.

Last month foreclosure resales – homes that had been foreclosed on in the prior 12 months – fell to 26.7 percent of the Bay Area’s resale market. That was the lowest since April 2008 and was down from 26.8 percent in May and 36.7 percent in June 2009. Foreclosure resales peaked at 52.0 percent in February 2009. The monthly average for foreclosure resales over the past 15 years is 7.9 percent.

Last month 39.2 percent of all Bay Area home sales were over $500,000, down slightly from 40.2 percent in May but up from 34.5 percent last year. Sales over $800,000 rose to 17.2 percent of June sales, up from 15.4 percent in May and 13.9 percent a year ago. Viewed a different way, sales of existing single-family houses in zip codes representing the top one-third of the market, based on their historical prices, accounted for 35.5 percent of all sales in June, about the same as in May but up from 31.3 percent a year ago.

The portion of sales occurring at the bottom of the price ladder also increased last month. Total sales under $300,000 were 34.2 percent of all transactions, up from 31.4 percent in May but down from 39.5 percent a year ago, when low-cost inland foreclosures were more plentiful. Some mid-priced markets slowed last month: Sales between $400,000 and $700,000 were 28.8 percent of all deals, down from 31.6 percent in May but up from 27.2 percent a year earlier.

Sales in higher-cost areas could be stronger if jumbo and adjustable-rate mortgages (ARMs) were easier to obtain.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 33.3 percent of last month’s purchase lending, down from 35.0 percent in May but up from 28.8 percent in June 2009 and a post-housing-boom low of 17.1 percent in January 2009. Before the August 2007 credit crunch, however, jumbos accounted for nearly 60 percent of the Bay Area purchase loan market.

In June, 11.9 percent of all home purchase loans were ARMs, down from 13.2 percent in May but up from 4.9 percent a year ago. The average monthly ARM rate over the last decade is nearly 50 percent. ARMs hit a low of 3.0 percent in January 2009.

Last month federally-insured FHA loans continued to fuel much of the first-time buyer activity and some move-up purchases. The low-down-payment loans made up 25.8 percent of Bay Area purchase lending last month, up from 24.4 percent in May and up from 23.9 percent a year ago, and 10.7 percent two years ago.

Last month absentee buyers – mostly investors – purchased 16.3 percent of all Bay Area homes sold, paying a median $255,000, which is up from a median of $209,000 a year ago. Buyers who appeared to have paid all cash – meaning there was no corresponding purchase loan found in the public record – accounted for 21.5 percent of sales in June, paying a median $258,250, which is up from a median $208,250 a year ago.

Home flipping has trended higher over the last year. Last month 2.2 percent of the homes that sold on the open market had been flipped, meaning bought and re-sold within a six-month period. That was up from a Bay Area flipping rate of 2.1 percent in May and up from 1.3 percent a year earlier. Last month’s flipping rates varied from 0.9 percent in San Francisco to 3.3 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 $1,709 last month, down from $1,739 the previous month, and up from $1,585 a year ago. Adjusted for inflation, last month’s payment was 35.9 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 52.6 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 remains above average, MDA DataQuick reported.

	Sales Volume			Median Price
All homes	Jun-09	Jun-10	%Chng	Jun-09	Jun-10	%Chng
Alameda	1753	1664	-5.10%	$335,000	$400,000	19.40%
Contra Costa	1,817	1,729	-4.80%	$250,000	$283,500	13.40%
Marin	271	289	6.60%	$710,000	$698,000	-1.70%
Napa	108	143	32.40%	$355,000	$367,500	3.50%
Santa Clara	2,090	1,929	-7.70%	$445,000	$527,500	18.50%
San Francisco	561	573	2.10%	$635,000	$663,500	4.50%
San Mateo	622	696	11.90%	$565,500	$600,000	6.10%
Solano	851	763	-10.30%	$185,000	$210,000	13.50%
Sonoma	571	587	2.80%	$300,000	$322,000	7.30%
Bay Area	8,644	8,373	-3.10%	$352,000	$410,000	16.50%