Bay Area Median Highest in Four Years

October 15, 2012

La Jolla, CA.--The median price paid for a Bay Area home rose to its highest level in more than four years in September, the result of a slowly improving economy, low mortgage interest rates and shifts in market mix, a real estate information service reported.

The median price paid for new and resale homes in the nine-county Bay Area rose to $429,000 last month. That was up 4.6 percent from $410,000 in August and up 17.5 percent from $365,000 in September a year ago. It was the highest since August 2008 when it was $447,000, according to San Diego-based DataQuick.

The low point of the current real estate cycle was $290,000 in March 2009, while the peak was $665,000 in June/July 2007. About half of the median’s peak-to-trough drop, as well as the median’s 17.5 percent increase over the last year, can be attributed to a shift in the sales mix. For example, foreclosure resales are at half the level of a year ago. And the number of homes that sold last month for less than $500,000 fell by 12.4 percent year-over-year, while sales above that threshold increased 20.7 percent.

“It’s obvious that a lot of fence-sitters are getting active. We’re probably past that most attractive of mathematical sweet spots, the one that combines low interest rates and low prices. In other words, price increases the past few months outweigh mortgage rate declines. Potential buyers are also encountering fewer homes for sale. Additionally, going through today’s qualification process for a mortgage is still a real grind,” said John Walsh, DataQuick president.

A total of 6,850 new and resale homes were sold in the Bay Area last month. That was down 20.2 percent from 8,579 in August, and up 1.5 percent from 6,749 for September 2011.

An August-to-September sales decline is normal for the season, although last month’s drop was exaggerated because the month started and ended with a weekend and had fewer business days. Sales for the month of September have varied from 5,014 in 2007 to 13,343 in 2003, while the average for all months of September since 1988, when DataQuick’s statistics start, is 8,572.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 37.1 percent of last month’s purchase lending, down from a revised 38.8 percent in August, and up from 32.1 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.

Adjustable-rate mortgages (ARMs), an important indicator of mortgage availability, accounted for 11.7 percent of the Bay Area’s home purchase loans. That was up from a revised 11.5 percent in August, and down from 12.8 percent in September last year. Since 2000, ARMs have accounted for 49.2 percent of all purchase loans. ARMs hit a low of 3.0 percent of purchase loans in January 2009.

Government-insured FHA home purchase loans, a popular choice among first-time buyers, made up 15.9 percent of all Bay Area purchase mortgages in September, up from 15.1 percent in August and down from 21.7 percent a year earlier.

The most active lenders to Bay Area home buyers last month were Wells Fargo with 14.7 percent of the market, RPM Mortgage with 3.7 percent and Bank of America with 3.4 percent.

Last month foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 13.9 percent of the resale market, down from a revised 14.5 percent in August, and down from 25.4 percent a year ago. Last month was the lowest since foreclosure resales were 10.1 percent in November 2007. 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 23.5 percent of Bay Area resales last month. That was up from an estimated 23.0 percent in August and down from 24.4 percent a year earlier.

Last month absentee buyers – mostly investors – purchased a near-record 24.1 percent of all Bay Area homes, up from 22.8 percent in August, and up from 21.9 percent a year ago. Absentee buyers paid a median $285,000 in September, up from $280,000 in August and up 16.5 percent from $245,000 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 28.4 percent of sales in September. That was up from a revised 27.9 percent in August, and up from 27.5 percent a year ago. The monthly average going back to 1988 is 12.6 percent. Cash buyers paid a median $300,000 in September, up from $295,000 in August and up 20.0 percent from $250,000 a year earlier.

Home flipping has picked up this year. The number of Bay Area homes that sold twice on the open market within a six-month period rose to 3.9 percent of all homes sold in September. That was up from a flipping rate of 3.6 percent in August and up from 2.7 percent 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 $1,535, the highest in two years. That was up from $1,492 in August, and up from $1,413 a year ago. Adjusted for inflation, last month’s payment was 45.3 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 59.6 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 has been trending downward and is well below peak levels reached over the last few years. Financing with multiple mortgages is low, down payment sizes are stable, DataQuick reported.


SalesVolume MedianPrice
All homes   Sep-11    Sep-12  % Chng     Sep-11    Sep-12  % Chng  
Alameda             1,348     1,322     -1.9%     $348,000     $379,000       8.9%
Contra Costa        1,394     1,403      0.6%     $252,000     $320,000      27.0%
Marin                 239       268     12.1%     $628,409     $650,000       3.4%
Napa                  124       126      1.6%     $315,000     $345,000       9.5%
Santa Clara         1,560     1,601      2.6%     $470,000     $550,000      17.0%
San Francisco         399       492     23.3%     $613,750     $745,000      21.4%
San Mateo             607       655      7.9%     $551,000     $620,000      12.5%
Solano                606       537    -11.4%     $195,000     $200,000       2.6%
Sonoma                472       446     -5.5%     $307,000     $335,000       9.1%
Bay Area            6,749     6,850      1.5%     $365,000     $429,000      17.5%

Source: DataQuick, www.DQNews.com

Media calls: Andrew LePage (916) 456-7157

Copyright 2012 DataQuick. All rights reserved.
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