Southland home sales post second annual gain; another record price drop
September 17, 2008
La Jolla, CA---Southern California home sales downshifted slightly in
August from July, but were higher than a year ago for the second consecutive
month. The median sales price continued to tumble, declining the most where
buyers were the most active, a real estate information service reported.
The median price paid for all new and resale houses and condos sold in
Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange
counties was $330,000 last month, down 5.2 percent from $348,000 in July and
down a record 34 percent from $500,000 in August 2007, according to San
Diego-based MDA DataQuick.
Last month's median stood at the lowest point since November 2003 when
it was also $330,000. The median peaked at $505,000 in the spring and summer
of last year.
"It's the most common and pressing question we hear from Wall Street and
Main Street: When will the housing market hit bottom? We see tentative signs
that sales - not prices - have hit bottom in some inland markets. That's
where home values have fallen the most, stoking a lot more demand," said John
Walsh, MDA DataQuick president.
"Some expect prices to bottom out soon, too," he continued. "That may
happen, but history suggests that few of us will time the bottom precisely.
Foreclosure activity remains high, credit is still tight, affordability
remains strained on the coast and the job market is soft. Our take remains
that a lot of buyers and sellers who don't have to act now are just sitting
tight, holding out for a better time to make their move."
The yearlong plunge in the Southland median sales price reflects three
things: Depreciation, a high concentration of sales made after or under the
threat of foreclosure (mainly in inland markets), and a dramatic decline in
homes financed with larger, so-called jumbo mortgages. Until recently such
mortgages were defined as over $417,000 and were common in pricier coastal
Before the credit crunch hit just over a year ago, nearly 40 percent of
Southland sales were financed with loans over $417,000, compared with 15.6
percent of sales last month.
A total of 19,366 new and resale houses and condos closed escrow in
Southern California last month. That was down 4.7 percent from 20,329 in July
but up 9.1 percent from 17,755 in August 2007.
August's sales total was 30 percent lower than the average for that month
and marked the third-lowest for any August since 1988, when MDA DataQuick's
statistics begin. August sales peaked in 2003 at 39,562.
Sales have picked up most - sometimes at double or more last year's pace
- in inland communities where home values have plummeted and foreclosures
have soared. Foreclosure resales made up 45.5 percent of all Southland
resales last month, up from 43.7 in July and 10 percent a year ago. The
figure represents the percentage of homes resold in August that had been
foreclosed on at some point in the prior 12 months.
Foreclosure resales were highest in Riverside County, at 65.2 percent of
resales, and lowest in Orange County, at 33.4 percent.
MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of
Vancouver-based MacDonald Dettwiler and Associates. MDA DataQuick 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 $1,566 last month, down from a $1,642 the previous
month, and down from $2,421 a year ago. Adjusted for inflation, the current
payment is at its lowest level in more than five years. It is 38.6 percent
below its year-ago level and 26.9 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 near the all-time low, as is financing with multiple mortgages.
Down payment sizes and flipping rates are stable, non-owner occupied buying
activity appears flat but might be emerging, MDA DataQuick reported.
Source: DQNews.com Media calls: Andrew LePage (916) 456-7157 or John Karevoll
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