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 markets.

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.

Sales Volume Median Price
All homes        Aug-07   Aug-08     %Chng      Aug-07      Aug-08     %Chng
Los Angeles        6,647     6,138     -7.7%   $550,000   $380,000   -30.90%
Orange             2,285     2,713     18.7%   $642,250   $440,000   -31.50%
Riverside          2,834     4,078     43.9%   $394,523   $247,450   -37.30%
San Bernardino     2,096     2,439     16.4%   $360,000   $215,000   -40.30%
San Diego          3,104     3,148      1.4%   $475,000   $350,000   -26.30%
Ventura              789       850      7.7%   $575,000   $400,000   -30.40%
SoCal            17,755   19,366      9.1%   $500,000   $330,000   -34.0% 


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

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