Bay Area Median Price Dips Month-to-Month Again; Still Way Up From Yr Ago

October 17, 2013

La Jolla, CA.--Bay Area home sales dropped more than usual in September compared with August but climbed slightly above the year-ago level thanks to more robust sales above $500,000 this year. For the second consecutive month the median sale price declined month-to-month, though it remained nearly 24 percent higher than a year earlier, a real estate information service reported.

A total of 7,141 new and resale houses and condos sold in the nine-county Bay Area last month. That was down 17.1 percent from 8,616 in August and up 3.6 percent from 6,890 in September last year, according to San Diego-based DataQuick.

On average, sales between August and September have declined 11.4 percent since 1988, when DataQuick’s statistics begin.

Last month’s sales were 16.2 percent lower than the long-term September average of 8,519 sales. September sales have ranged from a low of 5,014 in 2007 to a high of 13,343 in 2003. Bay Area sales have been below average every month since the fall of 2006.

The median price paid for a home in the Bay Area last month was $530,000, down 1.9 percent from $540,000 in August and up 23.5 percent from $429,000 in September 2012. In July the Bay Area’s median sale price hit its highest level so far this year – $562,000 – and the highest level for any month since December 2007. Then the median slipped to $540,000 in August.

The Bay Area median peaked at $665,000 in June/July 2007, then dropped to as low as $290,000 in March 2009. Last month’s median was 20.3 percent below the peak.

The median has increased year-over-year for 18 consecutive months, with those gains ranging from 7.5 percent to 33.5 percent. The annual increases have exceeded 20 percent for the last 11 months. September’s 23.5 percent year-over-year gain was the smallest since the median rose 21.8 percent this March.

“The surprisingly high home price appreciation we saw over the last year stemmed largely from very low mortgage rates, a very slim inventory of homes for sale, and very high levels of investor purchases. But in recent months we’ve seen each of these forces reverse a bit: Interest rates are higher, the inventory has risen, and investors now account for a lower share of all sales. In addition, we’ve seen a normal, seasonal slowing in the market heading into fall,” said John Walsh, DataQuick president.

He added: “It’s likely we’ll see year-over-year price gains trend lower for the foreseeable future. Housing market impacts related to the federal government shutdown and the threat of default on the nation’s debt would begin to show up in sales data released over the next couple of months.”

The month-to-month declines in the region’s median sale price since July appear to stem from a combination of factors. In addition to the more obvious market changes – higher mortgage rates, more homes for sale, fewer investor purchases – the median appears to also be edging lower because of a more technical reason: Home sales in low- to mid-cost communities have seen their share of the region’s sales activity rise since July, while the most expensive, top third of the housing market has seen a decline in market share since then.

However, when comparing this September to September last year, the picture is different: The number of homes that sold for less than $500,000 last month was 19.3 percent lower than in September 2012, while the number that sold for more than $500,000 increased 30.9 percent, DataQuick reported.

The impact of distressed property sales on the market continued to fade last month. The combination of foreclosure resales and “short sales” made up about 12.2 percent of the resale market, down from about 14 percent in August and around 38 percent a year earlier.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 3.6 percent of resales in September, down from 4.3 percent in August and down from 14.1 percent a year ago. The September level is the lowest since 3.5 percent in June 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 8.6 percent of Bay Area resales last month. That was down from an estimated 9.6 percent in August and down from 27.5 percent a year earlier.

Lenders provided $2.76 billion in mortgage money to Bay Area home buyers in September, down from $3.32 billion in August and up from $2.37 billion in September 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, RPM Mortgage with 4.1 percent and Bank of American with 3.7 percent.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 49.9 percent of last month’s purchase lending, down from a revised 52.9 percent in August, and up from 37.4 percent a year ago. Jumbo usage dropped to a low of 17.1 percent in January 2009.

Adjustable-rate mortgages (ARMs), an important indicator of mortgage availability, accounted for 19.5 percent of the Bay Area’s home purchase loans in September. That was the highest since the ARM share was 20.8 percent in August 2008. Last month’s ARM level was up from 19.4 percent the month before and up from 11.6 percent in September last year. Over the last decade ARMs have represented a monthly average of 38.4 percent of all purchase loans. ARMs hit a low of 3.0 percent of all purchase loans in January 2009.

Government-insured FHA home purchase loans, a popular choice among first-time buyers, accounted for 11.1 percent of all Bay Area home purchase mortgages in September, up from 10.8 percent in August and down from 15.7 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 20.7 percent of all Bay Area homes. That was up slightly from 20.3 percent in August, and down from 23.9 percent a year ago. The absentee share of all sales peaked at 28.7 percent this February, while the monthly average since 2000 is 15.3 percent. Absentee buyers paid a median $420,000 in September, up 47.1 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 24.0 percent of sales in September. That was up slightly from 23.7 percent the month before and down from 28.4 percent a year earlier. The monthly average going back to 1988 is 13.2 percent, while the peak was 32.3 percent this February. Cash buyers paid a median $440,000 in September, up 46.2 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 $2,146, down from $2,179 in August and up from $1,535 in September last year. Adjusted for inflation, last month’s payment was 24.7 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 44.3 percent below the current cycle's peak in July 2007.

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 Sep-12 Sep-13  % Chng   Sep-12 Sep-13  % Chng  
Alameda           1,404 1,468 4.6% $379,000 $510,500 34.7%
Contra Costa      1,403 1,385 -1.3% $320,000 $409,000 27.8%
Marin             268 300 11.9% $650,000 $750,000 15.4%
Napa              126 131 4.0% $345,000 $431,500 25.1%
Santa Clara       1,601 1,753 9.5% $550,000 $640,000 16.4%
San Francisco     516 511 -1.0% $745,000 $820,000 10.1%
San Mateo         589 561 -4.8% $620,000 $680,000 9.7%
Solano            537 495 -7.8% $200,000 $273,500 36.8%
Sonoma            446 537 20.4% $335,000 $409,500 22.2%
Bay Area          6,890 7,141 3.6% $429,000 $530,000 23.5%

Source: DataQuick, www.DQNews.com

Media calls: Andrew LePage (916) 456-7157

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