Bay Area Home Prices Continue to Rise; Sales Up from March, Flat Yr/Yr

May 14, 2014

La Jolla, CA.----The median price paid for a home in the Bay Area rose to a new post-recession high in April as potential buyers continued to scramble in a seller’s market of limited supply. The number of homes sold was virtually flat compared with a year ago, a real estate information service reported.

A total of 7,555 new and resale houses and condos were sold in the nine-county Bay Area last month. That was up 19.8 percent from 6,308 in March and down 0.9 percent from 7,621 in April a year ago, according to San Diego-based DataQuick.

Bay Area sales generally increase from March to April, but the 19.8 percent increase this year was high. The average increase is 4.8 percent. Since 1988, when DataQuick’s statistics begin, April sales have ranged from the low of 5,636 in 1995 to a high of 14,430 in 2004. Last month’s sales were 15.9 percent below the average 8,978 for April since 1988. Bay Area sales haven’t been above average for any particular month in more than eight years.

“While there are some interesting sub-surface trends, isn’t what we’re looking at fairly straightforward? The Bay Area economy is relatively strong, a lot of people have well-paying jobs or have saved money, or both. So we have X number of dollars chasing Y number of available homes. In this scenario, what we should see soon is more homes being put up for sale,” said John Karevoll, DataQuick analyst.

The median price paid for a home in the nine-county Bay Area rose last month to $610,000, the highest since it was $629,500 in November 2007. Last month’s median increased 5.4 percent from $579,000 in March, and rose 19.6 percent from $510,000 in April last year. On a year-over-year basis, the median has increased the last 25 months, according to San Diego-based DataQuick.

The median peaked at $665,000 in June and July 2007, then dropped to a low of $290,000 in March 2009. That means that by last month, 85.3 percent of the post-financial-crisis decline had been regained.

While some of last month’s year-over-year jump in the median can be attributed to a shift toward more mid- to high-end sales, probably close to three-fourths of the median's increase can be attributed to rising home values.

Last month the number of homes sold for less than $500,000 dropped 24.3 percent year-over-year, while the number that sold for more increased 9.5 percent.

A variety of market indicators are trending incrementally towards long-term norms.

Adjustable-rate mortgages (ARMs), an important indicator of mortgage availability, are slowly regaining their foothold in the market. ARMs accounted for 27.7 percent of the Bay Area’s home purchase loans in April, up from a revised 26.7 percent in March, and well up from the 14.9 percent for April last year. It was the highest since 30.9 percent in April 2008. ARMs hit a low of 3.0 percent of loans in January 2009. Since 2000, ARMs have accounted for 47.0 percent of all Bay Area purchase loans.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 55.9 percent of last month’s purchase lending, the highest since it was 58.6 percent in August 2007, when the credit crunch struck. Last month’s 55.9 percent was up from a revised 53.2 percent in March, and up from 47.5 percent a year ago. Jumbo usage dropped to as low as 17.1 percent in January 2009.

The most active lenders to Bay Area home buyers last month were Wells Fargo with 14.5 percent of the purchase loan market, Bank of America with 4.7 percent and RPM Mortgage with 3.2 percent, DataQuick reported.

Government-insured FHA home purchase loans, a popular choice among first-time buyers, accounted for 10.0 percent of all Bay Area home purchase mortgages in April. That was up from 9.5 percent in March and down from 11.2 percent 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. DataQuick was acquired in March by Irvine-based property information company CoreLogic. Because of late data availability, sales were estimated in Alameda, San Francisco, San Mateo and Solano counties.

Last month distressed property sales – the combination of foreclosure resales and “short sales” – made up about 7.4 percent of the resale market. That was down from about 8.9 percent in March and down from about 20.1 percent a year ago.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 3.6 percent of resales in April, down from a revised 4.3 percent the month before, and down from 8.4 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 3.8 percent of Bay Area resales last month. That was down from an estimated 4.6 percent in March and down from 11.8 percent a year earlier.

Last month absentee buyers – mostly investors – purchased 20.2 percent of all Bay Area homes. That was down from March’s 20.7 percent and down from 24.2 percent for April a year ago. Absentee buyers paid a median $481,250 last month, up 28.8 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 22.9 percent of sales in April, down from 25.1 percent in March and down from 28.3 percent a year earlier. The monthly average going back to 1988 is 13.1 percent. Cash buyers paid a median $521,250 in April, up 33.3 percent from a year earlier.

Bay Area home buyers put $2.26 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 $2.64 billion last May. They borrowed $2.83 billion in mortgage money from lenders last month.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $2,426. Adjusted for inflation, last month’s payment was 15.8 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 37.7 percent below the current cycle's peak in July 2007. It was 90.7 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 Apr-13 Apr-14   % Chng Apr-13 Apr-14   % Chng
Alameda             1,471      1,515       3.0%     $448,250     $565,000      26.0%
Contra Costa        1,482      1,417      -4.4%     $397,500     $455,000      14.5%
Marin                 345        358       3.8%     $799,000     $834,909       4.5%
Napa                  136        134      -1.5%     $385,000     $449,500      16.8%
Santa Clara         1,788      1,811       1.3%     $645,000     $711,000      10.2%
San Francisco         615        612      -0.5%     $815,000     $922,500      13.2%
San Mateo             609        694      14.0%     $726,000     $762,500       5.0%
Solano                564        494     -12.4%     $238,000     $300,000      26.1%
Sonoma                611        520     -14.9%     $376,000     $413,296       9.9%
Bay Area            7,621      7,555      -0.9%     $510,000     $610,000      19.6%

Source: DataQuick, www.DQNews.com

Media calls: Andrew LePage (916) 456-7157

Copyright 2014 DataQuick. All rights reserved.
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