Bay Area Home Sales Ease Amid Tight Supply; Median Price Up Again from 2012

March 14, 2013

La Jolla, CA.--Bay Area home sales eased back a notch while prices continued their upward off-bottom bounce last month, the result of a slow rebalancing act in a market environment of constrained supply and finicky mortgage lending, a real estate information service reported.

A total of 5,404 new and resale houses and condos sold in the nine-county Bay Area in February. That was down 1.8 percent from 5,501 the month before, and down 6.1 percent from 5,753 for February a year ago, according to San Diego-based DataQuick.

Sales are generally flat from January to February. The average February, going back to 1988, when DataQuick’s statistics begin, had 6,241 sales. February sales have ranged from 3,989 in 2008 to 8,901 in 2002.

The median price paid for a home in the nine-county Bay Area last month was $405,000. That was down 2.4 percent from $415,000 in January and up 24.6 percent from $325,000 for February a year ago.

The median has had a double-digit year-over-year increase the last nine months, and the past four months have seen gains above 20 percent.

“Isn’t this Economics 101? Supply and demand? If demand outstrips supply in a free market, the price goes up. The last time the number of homes sold exceeded the historical average for a given month was back in 2006. So a lot of demand has accumulated. Now, with a recovering economy, prices still closer to the bottom than to the top, with ultra-low mortgage interest rates and tight supply, the stage is set for price gains. This spring is going to be interesting,” said John Walsh, DataQuick president.

The Bay Area's median sale price reached a high of $665,000 in June/July 2007 and then fell to a low of $290,000 in March 2009. On a year-over-year basis the median dropped more than 30 percent each month from August 2008 through May 2009.

At the median's rate of increase over the past year, it's likely that sometime this spring or summer it will have recovered about half of its loss since its peak.

At least half of February's 24.6 percent, year-over-year increase in the median sale price is the result of changes in market mix, with sales shifting away from low-cost distress homes toward more mid-market and move-up homes.

Last month the number of homes that sold for less than $500,000 decreased 14.4 percent year-over-year, while the number sold for $500,000-plus increased 27.7 percent, DataQuick reported.

Last month distressed property sales – the combination of foreclosure resales and “short sales” – made up about 35.0 percent of the resale market. That was down from 36.0 percent in January and down from 53.4 percent a year ago.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 13.6 percent of resales in February, down from a revised 14.1 percent in January, and down from 26.4 percent a year ago. Last month was the lowest since 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 21.4 percent of Bay Area resales last month. That was down from an estimated 21.9 percent in January and down from 27.0 percent a year earlier.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 37.5 percent of last month’s purchase lending, up from a revised 35.8 percent in January, and up from 27.2 percent a year ago. Jumbo usage dropped as low as 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 11.1 percent of the Bay Area’s home purchase loans. That was up from a revised 10.9 percent in January, and down from 12.1 percent in February last year. Since 2000, ARMs have accounted for 48.5 percent of all purchase loans. ARMs hit a low of 3.0 percent of loans in January 2009.

Government-insured FHA home purchase loans, a popular choice among first-time buyers, accounted for 15.3 percent of all Bay Area home purchase mortgages in February, up from 15.0 percent in January and down from 22.9 percent a year earlier. In recent months the FHA level has the been the lowest since summer 2008, reflecting both tougher qualifying standards and the difficulties first-time buyers have competing with investors and other cash buyers.

The most active lenders to Bay Area home buyers last month were Wells Fargo with 15.0 percent of the market, Stearns Lending with 4.0 percent, and RPM Mortgage with 3.7 percent.

Last month absentee buyers – mostly investors – purchased 28.2 percent of all Bay Area homes, an all-time high (absentee statistics go back to January 2000). Last month's absentee level was up from a revised 26.7 percent in January, and up from 25.6 percent a year ago. Absentee buyers paid a median $290,000 in February, up 18.4 percent from $245,000 a year earlier.

Buyers who appear to have paid all cash – meaning no sign of a corresponding purchase loan was found in the public record – accounted for a record 31.9 percent of sales in February. That was up from 28.4 percent the month before and 31.5 percent a year earlier. The monthly average going back to 1988 is 12.9 percent. Cash buyers paid a median $303,000 in February, up 23.7 percent from $245,000 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 Francisco counties.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $1,460. That was down from $1,479 in January, and up from $1,243 a year ago. Adjusted for inflation, last month’s payment was 48.1 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 61.6 percent below the current cycle's peak in July 2007.

Indicators of market distress continue to decline. Foreclosure activity is well below peak levels reached in the last few years. Financing with multiple mortgages is low, and down payment sizes are stable, DataQuick reported.

SalesVolume MedianPrice
All homes Feb-12 Feb-13  % Chng   Feb-12 Feb-13  % Chng  
Alameda              1,183      1,144     -3.3%     $295,000     $372,000      26.1%
Contra Costa         1,168      1,148     -1.7%     $235,000     $311,000      32.3%
Marin                  203        201     -1.0%     $535,500     $650,000      21.4%
Napa                   103         91    -11.7%     $320,000     $415,000      29.7%
Santa Clara          1,281      1,159     -9.5%     $432,000     $554,000      28.2%
San Francisco          409        356    -13.0%     $624,000     $700,500      12.3%
San Mateo              496        414    -16.5%     $492,500     $635,000      28.9%
Solano                 532        488     -8.3%     $172,000     $214,250      24.6%
Sonoma                 378        403      6.6%     $295,000     $345,000      16.9%
Bay Area             5,753      5,404     -6.1%     $325,000     $405,000      24.6%

Source: DataQuick,

Media calls: Andrew LePage (916) 456-7157

Copyright 2013 DataQuick. All rights reserved.
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