Bay Area August Home Sales Dip; Median Price Eases Back From July

September 13, 2013

La Jolla, CA.--Home sales in the Bay Area leveled off last month as prices underwent a modest and seasonal late-summer dip. While there are still imbalances in the sales mix and purchase patterns, indications are that the market continues to normalize incrementally, a real estate information service reported.

A total of 8,616 new and resale houses and condos were sold in the nine-county Bay Area last month. That was down 7.7 percent from 9,339 in July and down 0.6 percent from 8,670 in August last year, according to San Diego-based DataQuick.

Last month’s sales were 10.3 percent behind the long-term August average of 9,601. August sales have ranged from 6,688 in 1992 to 13,940 in 2004. DataQuick’s statistics begin in 1988 and the Bay Area has had below-average sales every month since the fall of 2006.

“As the market pendulum swings back toward normal, trends will be affected by more mundane market factors such as interest rates, employment, economic growth, affordability, mortgage availability, and how fast demand is generated and met. The next few months are going to be interesting, especially when it comes to pricing trends,” said John Walsh, DataQuick president.

The median price paid for a home in the Bay Area last month was $540,000. That was down 3.9 percent from $562,000 in July, and up 31.7 percent from $410,000 in August a year ago. Due to seasonal shifts in sales patterns, the Bay Area median almost always declines from July to August.

When adjusting for changes in market mix, it appears that roughly three-fourths of August’s 31.7 percent year-over-year rise in the median sale price reflects an actual increase in home values.

The Bay Area median peaked at $665,000 in June/July 2007, then dropped as low as $290,000 in March 2009. Last month’s median was 18.8 percent below the peak.

Bay Area home buyers continue to put near-record amounts of their own money into residential real estate. In August they paid a total of $2.3 billion out of pocket in the form of down payments or cash purchases. That was about the same as the month before. The all-time high was $2.6 billion this May.

The number of homes that sold for less than $500,000 last month dropped 23.2 percent year-over-year, while the number that sold for more increased 28.2 percent, DataQuick reported.

Last month distressed property sales – the combination of foreclosure resales and “short sales” – made up about 15 percent of the resale market. That was the same as in July and down from 37.8 percent a year ago.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 4.6 percent of resales in August, the same as July’s revised percentage, and down from 14.5 percent a year ago. The July and August level is the lowest since 4.4 percent in August 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 10.0 percent of Bay Area resales last month. That was down from an estimated 10.6 percent in July and down from 23.3 percent a year earlier.

Lenders provided $3.27 billion in mortgage money to Bay Area home buyers in August, down from $3.46 in July and up from $2.78 in August last year. The most active lenders to Bay Area home buyers last month were Wells Fargo with 14.4 percent of the purchase loan market, Bank of American with 3.9 percent and RPM Mortgage with 3.7 percent.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 47.8 percent of last month’s purchase lending, down from a revised 49.8 percent in July, and up from 38.7 percent a year ago. Jumbo usage dropped to as low as 17.1 percent in January 2009.

Adjustable-rate mortgages (ARMs), an important indicator of mortgage availability, accounted for 19.1 percent of the Bay Area’s home purchase loans in August. That was basically the same as the month before, when it was 19.2 percent, and up from 11.5 percent in August last year. Since 2000, ARMs have accounted for 47.5 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 11.0 percent of all Bay Area home purchase mortgages in August, up from 9.8 percent in July and down from 15.3 percent a year earlier. In recent months the FHA level has 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.

Last month absentee buyers – mostly investors – purchased 21.0 percent of all Bay Area homes. That was up slightly from 20.5 percent in July, and down from 22.8 percent a year ago. Absentee buyers paid a median $400,000 in August, up 42.9 percent from 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 22.4 percent of sales in August. That was down from a revised 23.5 percent the month before and down from 27.9 percent a year earlier. The monthly average going back to 1988 is 13.2 percent. Cash buyers paid a median $449,000 in August, up 52.2 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, San Francisco and San Mateo counties.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $2,179. Adjusted for inflation, last month’s payment was 23.6 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 43.5 percent below the current cycle's peak in July 2007. It was 73.1 percent above the February 2012 bottom of the current cycle.

Indicators of market distress continue to decline. Foreclosure activity remains below year-ago levels and far below peak levels reached over the last five years. Financing with multiple mortgages is low, down payment sizes are stable, DataQuick reported.


Sales Volume Median Price
All homes Aug-12 Aug-13  % Chng   Aug-12 Aug-13  % Chng  
Alameda               1,796      1,825       1.6%    $380,000     $512,000      34.7%
Contra Costa          1,649      1,645      -0.2%    $300,000     $420,250      40.1%
Marin                   341        355       4.1%    $634,000     $760,000      19.9%
Napa                    160        137     -14.4%    $350,000     $460,000      31.4%
Santa Clara           1,892      1,989       5.1%    $542,750     $647,478      19.3%
San Francisco           739        646     -12.6%    $700,000     $825,000      17.9%
San Mateo               725        719      -0.8%    $592,500     $722,250      21.9%
Solano                  693        648      -6.5%    $190,000     $277,500      46.1%
Sonoma                  675        652      -3.4%    $345,000     $400,000      15.9%
Bay Area              8,670      8,616      -0.6%    $410,000     $540,000      31.7%

Source: DataQuick, www.DQNews.com

Media calls: Andrew LePage (916) 456-7157

Copyright 2013 DataQuick. All rights reserved.
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