Southland home sales edge up, prices level off
July 13, 2010
La Jolla, CA---Southern California’s housing market continued its slow
crawl toward normalcy in June as sales volume rose and the median price
slipped back a notch from May, but remained 13 percent higher than a year ago.
Red-hot, fire-sale deals continued to give way to mere bargains in the lower-
cost inland markets where first-time buyers and investors have competed
fiercely, a real estate information service reported.
A total of 23,871 new and resale homes were sold in Los Angeles,
Riverside, San Diego, Ventura, San Bernardino and Orange counties last month.
That was up 7.2 percent from 22,270 in May, and up 2.6 percent from 23,262 for
June 2009, according to MDA DataQuick of San Diego.
The sales count was the highest since July last year when 24,104 homes
were sold. It was the strongest month of June since 2006 when 31,602 homes
sold. The average June since 1988 has had 28,086 sales.
“The market was wildly out of kilter a year ago, now it’s just somewhat
out of kilter. We’re still seeing lots of bargain hunting, and we’re not
seeing much discretionary buying. The single-biggest issue is still mortgage
financing. Rates may be at record lows, but that doesn’t mean much if the
lender won’t qualify you,” said John Walsh, MDA DataQuick president.
“Still, more money was spent last month buying homes in Southern
California than in the past two years, and more money was loaned. The tax
credits had something to do with that, though it’s not clear exactly how much.
With the impact of the credits fading fast, the next few months will tell us a
The median price paid for a Southland home was $300,000 last month. That
was down 1.6 percent from $305,000 in May, and up 13.2 percent from $265,000
for June 2009. The low point of the current cycle was $247,000 in April 2009,
the high point was $505,000 in mid 2007. The median’s peak-to-trough drop was
due to a decline in home values as well as a shift in sales toward low-cost
homes, especially foreclosures.
Foreclosure resales accounted for 33.0 percent of the resale market last
month, down from 33.9 percent in May, and down from 45.3 percent a year ago.
The all-time high was February 2009 at 56.7 percent, DataQuick reported.
Government-insured FHA loans, a popular choice among first-time buyers,
accounted for 39.0 percent of all mortgages used to purchase homes in June.
Last month 20.8 percent of all sales were for $500,000 or more, compared
with 22.2 percent in May and 19.3 percent a year ago. Zip codes in the top
one-third of the Southland housing market, based on historical prices,
accounted for 29.6 percent of existing single-family house sales last month,
down from 31.0 percent in May but up from 27.8 percent a year ago. Over the
last decade those high-end areas have contributed a monthly average of 33.3
percent of regional sales. Their contribution to overall sales hit a low of
21.0 percent in January 2009.
High-end sales would be stronger, and the overall market recovery more
robust, if adjustable-rate mortgages (ARMs) and “jumbo” loans were more
available. Both have become much more difficult to obtain since the August
2007 credit crisis.
While 43.9 percent of all Southland purchase mortgages since 2000 have
been ARMs, it was 6.6 percent last month, up from 6.5 percent in May and up
from 2.7 percent in June last year.
Jumbo loans, mortgages above the old conforming limit of $417,000,
accounted for 17.3 percent of last month’s purchase lending, up from 17.2
percent in May and from 14.9 percent in June 2009. Before the credit crisis,
jumbos accounted for 40 percent of the market.
Absentee buyers – mostly investors and some second-home purchasers –
bought 19.7 percent of the homes sold in June, paying a median of $220,000.
Buyers who appeared to have paid all cash – meaning there was no indication
that a corresponding purchase loan was recorded – accounted for 23.5 percent
of June sales, paying a median $213,000. In February this year cash sales
peaked at 30.1 percent. The 22-year monthly average for Southland homes
purchased with cash is 14.1 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 six-month period was 3.4 percent, while a year ago it was 1.9 percent. Last
month it varied from as little as 3.0 percent in Orange and San Diego counties
to as much as 3.8 percent in Los Angeles County.
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 $1,251 last month, down from $1,293 for May, and up
from $1,193 for June a year ago. Adjusted for inflation, current payments are
44.3 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 but is lower than
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.
Source: DQNews.com Media calls: Andrew LePage (916) 456-7157 or John Karevoll
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