Southland home sales drag along bottom

July 16, 2008

La Jolla, CA---Home sales in Southern California continued at their slowest pace in more than two decades last month as many potential buyers and sellers held off if they could, or struggled with mortgage financing if they couldn't, a real estate information service reported.

A total of 17,424 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 3.0 percent from 16,917 the previous month and down 13.6 percent from 20,166 for June a year ago, according to DataQuick Information Systems.

While last month's sales were the highest in ten months, it was still the slowest June in DataQuick's statistics, which go back to 1988. The June average is 28,488 sales, the peak was reached in 2005 when 40,156 homes sold.

"The mortgage market turbulence is putting quite a bit of activity on hold. Policy decisions about underwriting don't really mean much if there's little or no money to lend. Even some very well-qualified households aren't getting mortgages these days, although this could all change fast if liquidity comes back," said John Walsh, DataQuick president.

The median price paid for a Southland home was $355,000 last month, down 4.1 percent from $370,000 in May and down 29.3 percent from $502,000 for June 2007. The peak of $505,000 was reached in March, April, May and July of last year.

The median has fallen because of depreciation, especially in inland markets, and because of the steep dropoff in home financing in the so-called jumbo category, which until recently was defined as loans above $417,000.

Before the credit crunch hit in August 2007, nearly 40 percent of Southland sales were financed with jumbo loans. Jumbos last month accounted for 16.3 percent of Southland sales – up from 15.7 percent in May.

Foreclosure resales continue to be a dominant factor in today's Southern California market accounting for 41.1 percent of all resales. That was up from 39.2 percent in May, and up from 7.3 percent in June a year ago. Foreclosure resales ranged from 18.9 percent in Orange County last month to 62.3 percent in Riverside County.

DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,671 last month, down from a $1,713 the previous month, and down from $2,430 a year ago. Adjusted for inflation, the current payment is at its lowest level five years. It's 34.6 percent below its year- ago level and 22 percent lower than the spring of 1989, the peak of the prior real estate cycle.

Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, financing with adjustable-rate mortgages is still at a six-year low. Down payment sizes and flipping rates are stable, non-owner occupied buying activity is low, DataQuick reported.

Sales Volume Median Price
All homes Jun-07 Jun-08 %Chng Jun-07 Jun-08 %Chng
Los Angeles       7,580    5,678   -25.1%   $545,000   $415,000   -23.90%
Orange            2,641    1,930   -26.9%   $645,000   $495,000   -23.30%
Riverside         3,359    3,757    11.8%   $400,000   $275,000   -31.30%
San Bernardino    2,190    2,215     1.1%   $365,000   $240,000   -34.20%
San Diego         3,510    3,077   -12.3%   $495,500   $370,000   -25.30%
Ventura             886      767   -13.4%   $582,000   $420,000   -27.80%
SoCal            20,166   17,424   -13.6%   $502,000   $355,000   -29.30%

Source: Media calls: Andrew LePage (916) 456-7157 or John Karevoll (909) 867-9534

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