Bay Area Home Sales Slowest Since 2008

March 13, 2014

La Jolla, CA.----Bay Area home buyers were kept scrambling last month as a continued lack of inventory contributed heavily to a six-year low in sales. The median price paid for a home increased from January and remained 33 percent higher than a year earlier, a real estate information service reported.

A total of 4,963 new and resale houses and condos sold in the nine-county Bay Area last month. That was the lowest for any February since 2008, when 3,989 homes sold. Last month’s sales rose 5.7 percent from 4,696 in January, and fell 8.2 percent from 5,404 in February 2013, according to San Diego-based DataQuick.

Since 1988, when DataQuick’s statistics begin, February sales have ranged from a low of 3,989 in 2008 to a high of 8,901 in 2002. Last month’s sales were 19.9 percent below the average number of February sales – 6,194 – since 1988. Sales haven’t been above average for any month in more than seven years.

“A number of factors can keep a lid on sales. Affordability, for example. Or hard-to-get mortgages. These factors certainly play a role today, but clearly the main culprit is an inadequate supply of homes for sale. It’s going to be fascinating to watch how things play out between now and June. At some point rising home prices will trigger a more significant increase in the number of homes on the market. It’s just a question of when,” said John Walsh, DataQuick president.

The median price paid for a home in the Bay Area in February was $540,000. That was up 2.9 percent from $525,000 in January and up 33.3 percent from $405,000 in February last year. On a year-over-year basis, the median has risen the last 23 months, with gains above 20 percent for the last 16 months.

The Bay Area median peaked at $665,000 in June and July 2007, then dropped as low as $290,000 in March 2009. While much of the median's ups and downs since its peak can be attributed to shifts in the types of homes sold, it now appears most of the year-over-year gain in the median reflects a rise in home values.

The number of homes that sold last month for less than $500,000 dropped 30.0 percent year-over-year, while the number that sold for more than $500,000 increased 16.9 percent, DataQuick reported.

Adjustable-rate mortgages (ARMs), an important indicator of mortgage availability, accounted for 24.8 percent of the Bay Area’s home purchase loans in February. That was down from a revised 25.1 percent in January, and up from 11.0 percent in February last year. The January ARM share was the highest since it was 25.4 percent in July 2008. ARMs hit a low of 3.0 percent of loans in January 2009. Since 2000, ARMs have accounted for 47.1 percent of all Bay Area purchase loans.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 48.2 percent of last month’s purchase lending, up from a revised 45.9 percent in January, and up from 37.1 percent a year ago. Jumbo usage dropped as low as 17.1 percent in January 2009.

Government-insured FHA home purchase loans, a popular choice among first-time buyers, accounted for 12.0 percent of all Bay Area home purchase mortgages in February. That was up a hair from 11.8 percent in January and down from 14.6 percent a year earlier.

Last month’s Bay Area home buyers borrowed a total of $1.82 billion in mortgage money from lenders. The most active lenders last month were Wells Fargo with 14.0 percent of the purchase loan market, Bank of America with 3.5 percent and Stearns Lending with 3.3 percent.

Distressed property sales – the combination of foreclosure resales and “short sales” – made up about 12.5 percent of last month’s resale market. That was down from 14.0 percent in January and down from 34.1 percent a year earlier.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 5.4 percent of resales in February, up from a revised 5.2 percent the month before, and down from 13.9 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 9.9 percent.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 7.0 percent of Bay Area resales last month. That was down from an estimated 8.8 percent in January and down from 20.2 percent a year earlier.

Last month absentee buyers – mostly investors – purchased 24.5 percent of all Bay Area homes. That was the same as in January and down from 32.3 percent in February a year ago. Absentee buyers paid a median $433,000 last month, up 39.2 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 26.8 percent of sales in February, up from a revised 25.6 percent in January and down from 32.4 percent a year earlier. The monthly average going back to 1988 is 13.0 percent. Cash buyers paid a median $470,000 in February, up 44.6 percent from a year earlier.

In February Bay Area home buyers put $1.17 billion of their own money on the table in the form of a down payment or as an outright cash purchase. That number hit an all-time high of $2.64 billion last May.

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 $2,138. Adjusted for inflation, last month’s payment was 25.1 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 44.7 percent below the current cycle's peak in July 2007. It was 69.5 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.

Sales Volume Median Price
All homes Feb-13 Feb-14  % Chng   Feb-13 Feb-14  % Chng  
Alameda              1,144        919    -19.7%     $372,000     $470,000      26.3%
Contra Costa         1,148        962    -16.2%     $311,000     $405,000      30.2%
Marin                  201        195     -3.0%     $650,000     $755,000      16.2%
Napa                    91         79    -13.2%     $415,000     $450,000       8.4%
Santa Clara          1,159      1,202      3.7%     $554,000     $670,000      20.9%
San Francisco          356        451     26.7%    $700,500    $945,000      34.9%
San Mateo              414        446      7.7%     $635,000     $705,000      11.0%
Solano                 488        358    -26.6%     $214,250     $264,000      23.2%
Sonoma                 403        351    -12.9%     $345,000     $407,000      18.0%
Bay Area             5,404      4,963     -8.2%     $405,000     $540,000      33.3%

Source: DataQuick, www.DQNews.com

Media calls: Andrew LePage (916) 456-7157

Copyright 2014 DataQuick. All rights reserved.
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