Bay Area Home Sales Slow, Prices Continue to Rise
December 17, 2013
La Jolla, CA.--Bay Area home sales dipped again in November, constrained by supply and market uncertainty amid mixed economic news. Prices continued their year-and-a-half-long upward march. Purchase and mortgage patterns are moving slowly but steadily toward long-term norms, a real estate information service reported.
A total of 6,659 new and resale houses and condos sold in the nine-county Bay Area in November. That was down 12.3 percent from 7,595 in October and down 10.9 percent from 7,474 in November last year, according to San Diego-based DataQuick.
Last month’s sales tally was 15.1 percent below the November average of 7,840 since 1988, when DataQuick’s statistics begin. Bay Area sales haven’t been above average for any particular month in more than seven years. The most active November was in 2004 when 11,906 homes sold, while the least active was in 2007 with 5,127 sales.
The median price paid for a home in the Bay Area last month was $550,000. That was 1.9 percent higher than $539,750 in October, and 25.6 percent above $438,000 in November 2012.
The Bay Area median peaked at $665,000 in June and July 2007, then dropped to a low of $290,000 in March 2009. While much of the median's ups and downs can be attributed to shifts in the types of homes sold, it appears that most of the current year-over-year increase in the median reflects an actual rise in home values.
“Up until half a year ago, the greater Bay Area market was basically bouncing up off bottom. Beginning last summer, the market started incrementally rebalancing, trending toward normalcy, as it were. Not just sales and prices: There has been a serious drop in distress sales, cash sales, absentee buyer sales. Mortgage financing patterns are still far from normal, but are moving in the right direction,” said John Walsh, DataQuick president.
The number of Bay Area homes that sold for less than $500,000 last month dropped 32.5 percent year-over-year, while the number that sold for more increased 8.2 percent, DataQuick reported.
Last month distressed property sales – the combination of foreclosure resales and “short sales” – made up 12.8 percent of the resale market. That was down from 13.1 percent in October and down from 35.7 percent a year ago.
Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 3.7 percent of resales in November, the same as the month before, and down from 12.5 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 10 percent.
Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 9.1 percent of Bay Area resales last month - the lowest since it was 9.0 percent in August 2008. Last month's figure was down from an estimated 9.5 percent in October and down from 23.2 percent a year earlier.
Bay Area home buyers put $1.8 billion of their own money on the table last month in the form of a down payment or as an outright cash purchase. That number hit an all-time high of $2.6 billion in May this year. Home buyers borrowed $2.7 billion in mortgage money from lenders last month.
Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 50.1 percent of last month’s purchase lending, up from a revised 47.7 percent in October, and up from 40.3 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 20.1 percent of the Bay Area’s home purchase loans in November. That was down from 20.5 percent in October, and up from 12.0 percent in November last year. Since 2000, ARMs have accounted for 47.4 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 low-down-payment choice among first-time buyers, accounted for 10.2 percent of all Bay Area home purchase mortgages in November. That was down from 10.4 percent in October and down from 14.7 percent a year earlier.
Last month absentee buyers – mostly investors – purchased 19.8 percent of all Bay Area homes, marking the first time it was below 20 percent since November 2010, when it was 19.1 percent. November’s absentee level was down from a revised 20.2 percent in October, and down from 25.0 percent in November last year. Absentee buyers paid a median $437,000 last month, up 36.6 percent year-over-year.
Buyers who appear to have paid all cash – meaning no sign of a corresponding purchase loan was found in the public record – accounted for 22.0 percent of sales in November. That was down from a revised 23.9 percent in October and down from 28.6 percent a year earlier. The monthly average going back to 1988 is 13.3 percent. Cash buyers paid a median $450,000 in November, up 36.4 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 $2,167. Adjusted for inflation, last month’s payment was 24.1 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 43.9 percent below the current cycle's peak in July 2007. It was 71.8 percent above the February 2012 bottom of the current cycle.
Indicators of market distress continue to decline. Foreclosure activity remains well below year-ago and far below peak levels. Financing with multiple mortgages is very low, and down payment sizes are stable, DataQuick reported.
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Source: DataQuick, www.DQNews.com
Media calls: Andrew LePage (916)
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