Bay Area Home Sales and Prices Continue Upward Trend

August 15, 2012

La Jolla, CA.--Home sales in the Bay Area rose on a year-over-year basis for the 13th month in a row in July, the result of increased mid- and up-market buying activity. The median price paid for a home was the highest since August 2008, a real estate information service reported.

A total of 8,461 new and resale homes were sold in the nine-county Bay Area last month. That was down 1.4 percent from 8,577 the month before, and up 22.9 percent from 6,887 for July 2011.

The decline from June is normal for the Bay Area summer season. July sales have varied from 6,666 in 1995 to 14,258 in 2004, while the average for all Julys since 1988, when DataQuick’s statistics start, is 9,371.

“The market has really been lopsided the past couple of years, tilted toward low-end bargain chasing. Now it’s re-balancing, slowly, with increased activity in mid and move-up markets. But mortgage availability remains one of the big challenges in the Bay Area,” said John Walsh, DataQuick president.

The median price paid for all new and resale houses and condos sold in the Bay Area last month was $421,000. That was up 1.0 percent from $417,000 in June, and up 12.6 percent from $374,000 in July 2011. Last month’s median was the highest since it was $447,000 in August 2008.

It appears that roughly half of the 12.6 percent year-over-year gain in July's median sale price can be attributed to a shift in market mix, where the overall regional median is tugged up by a higher share of sales occurring in the mid-to-upper price ranges. In July, price levels for the lowest-cost third of the Bay Area's housing stock rose 9.6 percent year-over-year, while they rose 7.8 percent in the middle and increased 1.2 percent in the top third of the market.

Last month 41.6 percent of Bay Area sales were for $500,000 or more, down from 41.8 percent in June, and up from 36.4 percent in July 2011. The low for the current cycle was January 2009, when just 22.7 percent of sales crossed the $500,000 threshold. Over the past 10 years, a monthly average of 47.9 percent of homes sold for $500,000-plus.

Last month distressed property sales – the combination of foreclosure resales and “short sales” – made up 34.6 percent of the resale market. That was down from 36.6 percent in June and down from 44.5 percent in July a year ago.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 15.7 percent of resales in July, the lowest since 14.0 percent in December 2007. Last month’s 15.7 percent was down from a revised 17.8 percent in June, and down from 25.9 percent a year ago. Foreclosure resales peaked at 52.0 percent in February 2009. The monthly average for foreclosure resales over the past 17 years is about 10 percent.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 18.9 percent of Bay Area resales last month. That was up from an estimated 18.8 percent in June and up from 18.6 percent a year earlier.

Government-insured FHA home purchase loans, a popular choice among first-time buyers, accounted for 16.3 percent of all Bay Area home purchase mortgages in July, up from 16.1 percent in June and down from 22.2 percent a year earlier. It was the lowest FHA level since it was 14.7 percent in August 2008.

One indicator of mortgage availability declined last month when adjustable-rate mortgages (ARMs) accounted for 13.3 percent of the Bay Area’s home purchase loans. That was down from a revised 14.2 percent in June, and down from 14.4 percent in July last year. Since 2000, ARMs have accounted for 49.6 percent of all purchase loans. ARMs hit a low of 3.0 percent of loans in January 2009.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 38.5 percent of last month’s purchase lending, the highest since 38.6 percent in December 2007. It was up from a revised 38.4 percent in June, and up from 33.4 percent a year ago. Jumbo usage dropped to 17.1 percent in January 2009. Before the credit crunch struck in August 2007, jumbos accounted for nearly 60 percent of the Bay Area purchase loan market.

The most active lenders to Bay Area home buyers last month were Wells Fargo with 17.7 percent of the market, RPM Mortgage with 4.2 percent and Bank of America with 3.5 percent. Combined market share for the top 10 lenders was 40.7 percent, down from 45.0 percent a year ago. Wells Fargo's share of the market a year ago was 16.9 percent, Bank of America's was 9.1 percent and RPM Mortgage's market share was 3.9 percent.

Last month absentee buyers – mostly investors – purchased 22.6 percent of the homes sold in the Bay Area, down from 23.0 percent in June, and up from 20.5 percent a year ago. Absentee buyers paid a median $250,000 in July, up 4.2 percent from a year ago.

Buyers who appear to have paid all cash – meaning no evidence of a corresponding purchase loan was found in the public record – accounted for 27.3 percent of sales in July. That was the same as in June, and up from 26.3 percent a year ago. The monthly average going back to 1988 is 12.2 percent. Cash buyers paid a median $270,000 in July, up 10.2 percent from a year earlier.

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 $1,522, down from $1,532 in June, and down from $1,525 a year ago. Adjusted for inflation, last month’s payment was 45.6 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 59.8 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 three years. Financing with multiple mortgages is low, down payment sizes are stable, DataQuick reported.

SalesVolume MedianPrice
All homes   Jul-11    Jul-12  Chng     Jul-11    Jul-12  Chng
Alameda              1,424     1,827     28.3%     $345,000     $385,000      11.6%
Contra Costa         1,445     1,718     18.9%     $258,500     $308,000      19.1%
Marin                  232       338     45.7%     $635,000     $660,000       3.9%
Napa                   105       135     28.6%     $281,000     $372,500      32.6%
Santa Clara          1,584     1,779     12.3%     $500,000     $565,000      13.0%
San Francisco          444       567     27.7%     $675,000     $714,000       5.8%
San Mateo              570       822     44.2%     $568,000     $618,000       8.8%
Solano                 604       610      1.0%     $185,500     $188,000       1.3%
Sonoma                 479       665     38.8%     $306,500     $320,000       4.4%
Bay Area             6,887     8,461     22.9%     $374,000     $421,000      12.6%

Source: DataQuick,

Media calls: Andrew LePage (916) 456-7157

Copyright 2012 DataQuick. All rights reserved.
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