Bay Area Home Sales Up Slightly; Price Increases Slow

July 16, 2014

La Jolla, CA.----Bay Area home sales rose slightly last month but remained well below long-term norms, while prices continued to increase but at one-third of the year-ago pace. Potential buyers are still struggling with a limited supply of homes for sale, prices near or at new peaks, and a still-constricted mortgage environment, a real estate information service reported.

A total of 7,915 new and resale houses and condos sold in the nine-county Bay Area last month. That was up 0.2 percent from 7,898 in May and up 0.2 percent from 7,897 in June last year, according to DataQuick, which is owned by Irvine-based CoreLogic, a leading global property information, analytics and data-enabled services provider.

June’s year-over-year increase in sales was the Bay Area’s first since last September, when sales rose 3.6 percent from a year earlier. Since 1988, when DataQuick’s statistics begin, June sales have ranged from a low of 7,118 in 1993 to a high of 15,735 in 2004. Last month’s sales were 20.2 percent below the June average of 9,916 sales since 1988. Bay Area sales haven’t been above average for any particular month in more than eight years.

“Trends in the Bay Area lead the rest of the state by at least half a year. The reason is straight out of Econ 101: Jobs. As far as underlying indicators go, we’re watching prices, especially from category to category. And we’re still watching how the mortgage market is behaving, and misbehaving. There’s a lot of opportunity out there for lending institutions that could expand their product lines. In today’s Bay Area real estate market, for example, adjustable-rate mortgages should be much more widespread,” said John Karevoll, DataQuick analyst.

The median price paid for a home in the nine-county Bay Area rose last month to $618,000, the highest since it was $629,000 in November 2007. Last month’s median increased 0.2 percent from $617,000 in May, and rose 11.4 percent from $555,000 in June last year. On a year-over-year basis, the median has increased the last 27 months, though last month’s 11.4 percent gain was the lowest in 22 months. In June last year the median rose 33.1 percent from a year earlier.

The Bay Area’s median sale price peaked at $665,000 in June and July 2007, then dropped to a low of $290,000 in March 2009. Almost all of last month’s year-over-year rise in the median can be attributed to rising home values.

The number of homes that sold last month for less than $500,000 dropped 16.8 percent year-over-year, while the number that sold for more rose 4.6 percent.

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

Adjustable-rate mortgages (ARMs), an important indicator of mortgage availability, are slowly regaining their foothold in the market. ARMs accounted for 26.6 percent of the Bay Area’s home purchase loans in June, down from a revised 27.2 percent in May, and up from 16.9 percent in June last year. ARMs hit a low of 3.0 percent of loans in January 2009. Since 2000, ARMs have accounted for 46.8 percent of all Bay Area purchase loans.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 57.1 percent of last month’s purchase lending – the highest level since the credit crunch struck in August 2007. Last month’s jumbo level was up from a revised 56.3 percent in May, and up from 51.1 percent a year ago. Jumbo usage dropped to as low as 17.1 percent in January 2009.

Government-insured FHA home purchase loans, a popular choice among first-time buyers, accounted for 10.2 percent of all Bay Area home purchase mortgages in June, up from 9.9 percent in May and down from 10.3 percent a year earlier.

San Diego-based DataQuick, which CoreLogic acquired in March, provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Because of late data availability, sales were estimated in San Francisco and San Mateo counties.

Last month foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 3.1 percent of all resales. That was unchanged from the month before, and down from 5.7 percent a year earlier. Foreclosure resales in the Bay Area peaked at 52.0 percent in February 2009, while the monthly average over the past 17 years is 9.8 percent.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 4.4 percent of Bay Area resales last month. That was down from an estimated 4.6 percent in May and down from 9.5 percent a year earlier.

Last month absentee buyers – mostly investors – purchased 20.8 percent of all Bay Area homes. That was up slightly from May’s revised 19.3 percent and down from 21.8 percent in June last 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 20.8 percent of sales in June. That was down from a revised 22.9 percent in May and down from 25.4 percent a year earlier. Last month’s cash level was the lowest since cash buyers purchased 20.2 percent of all homes in November 2008.

Bay Area home buyers put $2.70 billion of their own money on the table in the form of a down payment or as an outright cash purchase last month, an all-time peak. They borrowed $3.62 billion in mortgage money from lenders last month, the most since $3.82 billion in August 2007.

The most active lenders to Bay Area home buyers in June were Wells Fargo with 14.1 percent of the purchase loan market, Bank of America with 4.2 percent and RPM Mortgage with 3.3 percent, DataQuick reported.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $2,406. Adjusted for inflation, last month’s payment was 17.2 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 38.8 percent below the current cycle's peak in July 2007. It was 87.5 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 Jun-13 Jun-14   % Chng Jun-13 Jun-14   % Chng
Alameda             1,656      1,596      -3.6%     $540,000     $590,000       9.3%
Contra Costa        1,459      1,499       2.7%     $415,000     $461,000      11.1%
Marin                 375        386       2.9%     $802,000     $848,000       5.7%
Napa                  128        136       6.3%     $459,500     $485,000       5.5%
Santa Clara         1,905      1,856      -2.6%     $655,000     $738,000      12.7%
San Francisco         500        532       6.4%     $883,000   $1,000,000      13.3%
San Mateo             728        763       4.8%     $705,000     $810,000      14.9%
Solano                544        565       3.9%     $262,000     $300,000      14.5%
Sonoma                602        582      -3.3%     $412,750     $450,000       9.0%
Bay Area            7,897      7,915       0.2%     $555,000     $618,000      11.4%

Source: DataQuick, www.DQNews.com

Media calls: Andrew LePage (916) 456-7157

Copyright 2014 DataQuick. All rights reserved.
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