Southland home sales, median price up over last year

January 19, 2010

La Jolla, CA---Southern California home sales in December remained above year-ago levels for the 18th consecutive month, bolstered by gains in many mid- to high-end communities. The median sale price rose year-over-year for the first time since summer 2007, reflecting a more normal distribution of sales across all price categories, a real estate information service reported.

A total of 22,328 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 16.4 percent from November’s 19,181, and up 12.1 percent from 19,926 in December 2008, according to MDA DataQuick of San Diego.

Sales almost always rise from November to December. Last month’s gain was a bit higher than the average increase of 13 percent since 1988, when DataQuick’s statistics begin.

The December sales tally was the highest for that month since 24,209 homes sold in December 2006, but it was still 11.2 percent below the average for a December – 25,143 sales – over the past 22 years.

The sales pattern has changed a lot over the past year, with many mid-to high-end communities now contributing more transactions.

For example, relatively large annual sales gains were recorded last month in many well-known, higher-end markets including Beverly Hills, Santa Monica and Newport Beach – areas that saw very low sales a year ago. Meanwhile, some of the more affordable inland areas that saw robust 2008 sales recorded year-over-year declines last month. Those markets included Moreno Valley, Lake Elsinore and Palmdale.

The percentage of Southland homes sold above $500,000 last month rose to 20.2 percent of all sales, up from 16.5 percent a year earlier and the highest since it was 23.6 percent in August 2008. On average since 2000, $500,000-plus sales have made up 36.5 percent of total sales. Right before the credit crunch hit in August 2007, making larger “jumbo” mortgages more expensive and harder to obtain, $500,000-plus sales made up about 52 percent of Southland transactions.

More sales in once-dormant high-end communities helps explain last month’s year-over-year gain in the median sale price – the point where half of the homes sold for more, half for less.

The median paid for all Southland houses and condos sold in December was $289,000, up 1.4 percent from $285,000 in November and up 4 percent from $278,000 a year earlier. The last time the median increased year-over-year was in August 2007, when it rose 2.7 percent to $500,000, near its peak.

The median has increased or held steady for eight consecutive months, but in December it was still 42.8 percent lower than the peak Southland median of $505,000 reached during several months in early and mid 2007. In late 2008 and early 2009, the monthly declines in the median from a year earlier ranged from 30 to 40 percent.

“Several forces have pulled the region’s median sale price out of its nose dive and given it lift,” said John Walsh, MDA DataQuick president.

“We’ve seen the re-selling of foreclosed homes fall off its peak in newer lower-cost inland areas, while at the same time sales have started to pick up in some of the more established expensive areas. That simple shift in what’s selling, and what’s not selling, puts upward pressure on the median. That’s statistical. But we’ve also seen price floors, however temporary, form in many areas recently as the foreclosure inventory dwindled and buyers took advantage of lower prices, lower mortgage rates and tax credits. A meaningful comeback in the jumbo loan market would provide another big boost to the pricier areas.”

Last month there were only modest signs of improvements in the jumbo market. Mortgages above $417,000 – formerly the definition of a jumbo loan – accounted for 16.7 percent of all home purchase loans, the highest since 18.7 percent in January 2008. Such jumbo loans made up nearly 40 percent of purchases before the credit crunch.

Another form of financing critical to high-end sales also edged higher in December: 4.6 percent of purchase loans had an adjustable rate, which was the highest since adjustable-rate mortgages (“ARMs”) made up 7.2 percent of all home loans in September 2008. However, it was still far lower than the average monthly ARM rate of 51 percent since 2000.

December’s foreclosure resales remained well below peak levels but were still a large force in the market, edging higher than the prior month for the first time since last February. Foreclosure resales – houses and condos sold in December that had been foreclosed on in the prior 12 months – were 39.6 percent of resales, up from 39.0 percent in November but down from 53.5 percent in December 2008. They hit a high of 56.7 percent last February, then tapered or leveled off month-to-month until last month’s uptick.

First-time buyers and investors, including some paying all cash, continued to dominate the buy side of the market last month.

Government-insured FHA loans, a popular choice among first-time buyers, accounted for 39.6 percent of all home purchase mortgages in December.

Absentee buyers – mostly investors and some second-home purchasers – bought 19.2 percent of the homes sold in December. Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for 24.9 percent of December sales, based on an analysis of public records. That’s up from 22 percent in December 2008 but lower than the 2009 peak of 26.9 percent in September. The 22-year monthly average for Southland homes purchased with cash is 13.8 percent.

The “flipping” of homes has also trended higher over the past year. Last month the percentage of Southland homes flipped – bought and re-sold – within a three-week to six-month period was 3.1 percent. It varied from as little as 2.4 percent in San Diego County to as much as 3.8 percent in San Bernardino County. A year ago all Southland counties had flipping rates under 2 percent.

MDA DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, 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 $1,231 last month, up from $1,207 for November, and down from $1,239 for December a year ago. Adjusted for inflation, current payments were 44.4 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They were 54.4 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, although mortgage default notices have flattened out or trended lower in many areas. 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 Dec-08 Dec-09 %Chng Dec-08 Dec-09 %Chng
Los Angeles    5,848 7,679 31.3% $320,000 $339,000 5.9%
Orange         2,580 2,885 11.8% $397,000 $435,000 9.6%
Riverside      4,435 4,282 -3.4% $209,000 $196,000 -6.2%
San Bernardino 2,862 2,934 2.5% $180,000 $154,000 -14.4%
San Diego      3,325 3,652 9.8% $300,000 $330,000 10.0%
Ventura        876 896 2.3% $338,000 $360,000 6.5%
SoCal          19,926 22,328 12.1% $278,000 $289,000 4.0%

Source: 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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