Sales up, Prices Down for Bay Area Housing Market

April 14, 2011

La Jolla, CA.----Bay Area home sales last month logged the best March in four years, barely, as prices slipped back a notch. A variety of indicators – including investor and cash purchase levels and adjustable-rate loan use – pointed toward a more normal market, though suggested that it’s still a ways off, a real estate information service reported.

A total of 7,051 new and resale houses and condos sold in the nine-county Bay Area last month. That was up 41.3 percent from 4,991 in February and up 0.2 percent from 7,040 in March 2010, according to San Diego-based DataQuick.

An increase in sales from February to March is normal. Last month’s sales count was the highest for a March since 8,317 homes sold in March 2007.

“The housing market has certainly moved well back from the abyss of two years ago, but there is quite a ways to go before it’s even remotely normal. The Bay Area has much less of a foreclosure problem than the rest of the state, but by its own standards it’s still a sizeable problem that acts as a drag on prices. The big issue continues to be mortgage financing, which is still problematic for many potential borrowers,” said John Walsh, DataQuick president.

Last month 345 newly built homes sold in the Bay Area, the lowest for any March in DataQuick’s statistics. The previous March low was 355 in 1993.

The median price paid for all new and resale houses and condos in the Bay Area was $360,000 last month, up 6.7 percent from $337,250 in February and down 5.3 percent from $380,000 in March 2010.

The median usually increases from February to March because of a seasonal shift in purchase profiles. The median has fallen year-over-year for six consecutive months, following 12 months of annual gains.

The median peaked at $665,000 in June/July 2007 and dropped to a low of $290,000 in March 2009. Around half of the peak-to-trough drop was the result of a decline in home values, while the other half was a shift in the sales mix toward lower-cost homes, especially foreclosures.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – rose in March to 31.5 percent of the Bay Area’s resale market. Last month’s figure was down from 32.6 percent in February but up from 31.3 percent in March 2010. Foreclosure resales peaked at 52.0 percent in February 2009. The monthly average for foreclosure resales over the past 15 years is about 9 percent.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 17.6 percent of Bay Area resales last month. That was down from an estimated 20.2 percent in February and 18.1 percent a year earlier, but up from 11.6 percent two years ago.

Last month 33.7 percent of Bay Area sales were for $500,000 or more, up from 30.1 percent in February and down from 37.0 percent for March 2010. The all-time low was January 2009, when 22.7 percent of sales crossed that threshold. Over the past decade, a monthly average of 47.0 percent of homes sold for $500,000-plus.

Viewed differently, sales in zip codes representing the top one-third of the market, based on historical prices, accounted for 36.1 percent of all sales in March. That was up from 33.0 percent in February and up from 34.5 percent a year ago. Those higher-end areas’ contribution to regional sales had dropped to as low as 18.0 percent in January 2009, while the peak was 44.7 percent in July 2007. Their 10-year average monthly contribution is 35.6 percent.

Government-insured FHA loans, a popular choice among first-time buyers, accounted for 22.4 percent of all home purchase mortgages in March, down from 23.1 percent in February and down from 23.5 percent in March 2010. Last month’s figure was the lowest since it was 19.8 percent in November 2008.

While sales of higher-cost homes continue to suffer from the credit crunch that struck more than three years ago, one indicator of mortgage availability appears to be improving slightly. In March, 14.0 percent of the Bay Area’s home purchase loans were adjustable-rate mortgages, the highest portion since 20.7 percent in August 2008. It was up from 11.8 percent in February and up from 8.8 percent a year ago. The Bay Area’s average monthly ARM rate over the last decade is 53 percent. ARMs hit a low of 3.0 percent in January 2009.

Jumbo loans, mortgages above the old conforming limit of $417,000, remain hard to get and accounted for 30.3 percent of last month’s purchase lending, up from 26.9 percent in February, but down from 30.9 percent in March 2010. The post-housing-boom low was 17.1 percent in January 2009. Before the August 2007 credit crunch, jumbos accounted for nearly 60 percent of the Bay Area purchase loan market.

Last month absentee buyers – mostly investors – purchased 22.1 percent of all Bay Area homes sold, down from 23.4 percent in February and up from 17.0 percent a year ago. The monthly average since 1988 is 16.6 percent.

Buyers who appeared to have paid all cash – meaning no corresponding purchase loan was found in the public record – accounted for 27.8 percent of sales in March, down from the record 30.5 percent in February but up from 24.1 percent a year ago. The monthly average since 1988 is 11.7 percent.

Home flipping was steady in March, when 2.2 percent of the houses and condos that sold on the open market had been bought and re-sold within a six-month period. That was the same as in February and down from a flipping rate of 2.3 percent a year earlier. Last month’s flipping rates varied from 1.6 percent in Marin, Napa and San Mateo counties to 4.5 percent in Solano County.

San Diego-based 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 last month was $1,518, up from $1,440 in February, and down from $1,626 a year ago. Adjusted for inflation, last month’s payment was 43.9 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 58.5 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 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   Mar-10    Mar-11   %Chng   Mar-10    Mar-11   %Chng
Alameda           1,506    1,400    -7.0%   $360,000    $341,000     -5.3%
Contra Costa      1,412    1,414     0.1%   $275,000    $245,000    -10.90%
Marin               225      249    10.7%   $640,000    $668,250      4.4%
Napa                136      128    -5.9%   $327,500    $308,000     -6.0%
Santa Clara       1,602    1,665     3.9%   $500,000    $460,000     -8.0%
San Francisco       500      495    -1.0%   $675,000    $650,000     -3.7%
San Mateo           533      579     8.6%   $615,000    $555,000     -9.8%
Solano              660      608    -7.9%   $215,000    $190,000    -11.60%
Sonoma              466      513    10.1%   $318,000    $285,000    -10.40%
Bay Area          7,040    7,051     0.2%   $380,000    $360,000     -5.3%

Source: DataQuick Information Systems,

Media calls: Andrew LePage (916) 456-7157

Copyright 2011 DataQuick Information Systems. All rights reserved.