For
immediate release
Business editors/real estate writers
Southland home sales up again, drop in median price smallest in 2
years
La
Jolla, CA---Southern California home sales rose in October as prices showed more
signs of firming. The median sale price fell by the smallest amount in two
years, the result of a shrinking inventory of homes for sale and government and
industry efforts to stoke demand and curtail foreclosures, a real estate
information service reported.
Two
counties – Orange and San Diego – posted modest year-over-year increases in
their overall median sale price last month. It was the second consecutive gain
for Orange County and the first in more than three years for San Diego. Both
counties also posted small annual gains the past two months in their median
price paid for resale single-family detached houses.
Last month 22,132 new and resale houses and condos closed escrow in Los Angeles,
Riverside, San Diego, Ventura, San Bernardino and Orange counties. That was up
2.8 percent from 21,539 in September and also up 2.8 percent from 21,532 a year
earlier, according to MDA DataQuick of San Diego.
October marked the 16th month in a row with a year-over-year sales gain,
although last month’s was the smallest of those increases. The 2.8 percent
uptick in October sales from September wasn’t unusual, given sales have
increased between those two months in half of the years – including 2007 and
2008 – since 1988, when DataQuick’s statistics begin. The average change between
September and October is a decline of just under 1 percent.
Last month’s sales were the highest for an October since 2006, when 23,745 sold,
but were still 9.5 percent lower than the historical October average of 24,458
sales. Since 1988, October sales have ranged from a low of 12,913 in October
2007 to a high of 37,642 in October 2003.
Sales increases over the last two months can be partially attributed to the
recent increase in short sales, which take longer to close escrow. The result is
that some summer deals that might normally have closed earlier instead closed in
September and October.
Other factors driving home sales higher of late: A rush by some to take
advantage of the federal tax credit for first-time buyers, which was initially
set to expire at the end of this month but was recently extended and expanded.
Also, mortgage rates remain extremely attractive and, combined with home price
declines, have boosted housing affordability.
A
critical financing source for first-time buyers purchasing lower-cost homes,
especially foreclosures, has been the federally-insured FHA loan. FHA mortgages
accounted for 38.3 percent of all Southland purchase loans last month, compared
with 32.5 percent a year ago and just 2 percent two years ago. FHA’s share of
purchase loans varied last month from 26.2 percent in Orange County to 49.2
percent in Riverside County. They offer down payments as low as 3.5 percent and
relatively lenient qualifying standards.
“The government is playing a huge role in stabilizing and, to some extent,
reinvigorating the housing market,” said John Walsh, MDA DataQuick president.
“Its actions have triggered ultra-low mortgage rates, plentiful low-down-payment
(FHA) financing, an extended and expanded tax credit for home buyers, and
programs and political pressure aimed at reducing foreclosures.”
“The real question now is how well can the market perform next year as some of
the government stimulus disappears,” he continued. “The more upbeat outlooks
suggest a strengthening economy and job market will help pick up the slack, and
that demand for lower-cost foreclosures will remain robust. The more negative
forecasts assume, among other things, a much slower economic recovery, more
foreclosures than the market can readily digest, and more turbulence in the
credit markets.”
The
latter outlook suggests today’s market stability is contrived and will prove
short-lived – nothing more than a temporary price plateau – while the former
suggests home prices are currently at or near
bottom.
In
October, the median price paid for a Southland home was $280,000, up 1.8 percent
from $275,000 in September but down 6.7 percent from $300,000 in October 2008.
It was the median’s smallest annual decline for any month since September 2007,
when the median fell 4 percent from a year earlier. September 2007 – one month
after the current credit crunch hit – marked the beginning of a 26-month streak
of year-over-year declines in the median price.
The
region’s overall median sale price has risen or held steady on a month-to-month
basis ever since it dropped to a more-than 7-year low of $247,000 in April. Last
month the median was 44.6 percent lower than the peak $505,000 median reached
during several months in early and mid 2007.
Orange County logged a 3.9 percent annual gain in its overall median last month
and a 1.9 percent increase in its resale single-family house median. San Diego
County saw a 0.5 percent annual increase in its overall median price and a 2.9
percent gain in its median for resale houses.
Another price gauge analysts watch, the median paid per square foot for resale
single-family houses, has risen or held steady for the past six months. In
October it was $170 for the six-county area, the same as in September but 9.5
percent lower than a year earlier. The figure hit a low this year of $147 in
April.
Recent month-to-month and year-over-year gains in the median sale price reflect,
in large part, a shift of late toward foreclosures representing a lower
percentage of sales. It’s mainly the result of lenders and loan servicers
increasingly steering distressed borrowers into either an attempted short sale
or loan modification. This reduction in foreclosures is key because over the
past two years foreclosed properties were often the most aggressively priced on
the market.
Last month, foreclosure resales – houses and condos sold in October that had
been foreclosed on in the prior 12 months – made up 40.6 percent of all
Southland resales. That was up insignificantly from 40.4 percent in September
and down from a high of 56.7 percent in February this
year.
As
sales of lower-cost foreclosures began to wane earlier this year, sales in
higher-cost neighborhoods picked up. High-end homes began to account for a
greater share of all sales and helped reverse the steep slide in the median
price. Over the past few months, however, the high-end’s share of total sales
has flattened out.
In
October, sales of homes priced $500,000 and above fell to 18.5 percent of all
sales, up from a low this year in April of 13.4 percent but down from 20.2
percent in September and 19.6 percent a year earlier. In October 2007,
$500,000-plus sales were 41.1 percent of all
sales.
Availability of financing for pricier homes appeared to improve in recent
months, but the “jumbo” loans that many high-end buyers require remain
relatively expensive and difficult to obtain.
Mortgages above $417,000 – formerly the definition of a jumbo loan – made up
nearly 40 percent of purchases before the August 2007 credit crunch hit. Last
month they accounted for 15.1 percent, the same as in September but up from 13.3
percent a year ago and a 2009 low of 9.3 percent in
January.
MDA
DataQuick is a division of MDA Lending Solutions, a subsidiary of
Vancouver-based MacDonald Dettwiler and Associates. 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 $1,196 last month, up from $1,189 for September, and down from $1,470
in October a year ago. Adjusted for inflation, current payments were 46.0
percent below typical payments in the spring of 1989, the peak of the prior real
estate cycle. They were 55.8 percent below the current cycle’s peak in July
2007.
Indicators of market distress continue to move in different directions.
Foreclosure activity remains high by historical standards, although mortgage
default notices have flattened out or trended lower in many areas lately.
Financing with multiple mortgages is low, down payment sizes are stable, and
non-owner occupied buying is above-average in some markets, MDA DataQuick
reported.
(chart)
All
Homes #Sold
#Sold Pct.
$Median $Median Pct.
Oct-08 Oct-09 Chng
Oct-08 Oct-09 Chng
|
Los
Angeles |
6,824 |
7,409 |
8.6% |
$355,000 |
$325,000 |
-8.5% |
|
Orange |
2,833 |
2,800 |
-1.2% |
$420,000 |
$436,500 |
3.9% |
|
Riverside |
4,619 |
4,197 |
-9.1% |
$230,000 |
$190,000 |
-17.4% |
|
San
Bernardino |
2,856 |
3,176 |
11.2% |
$200,000 |
$150,000 |
-25.0% |
|
San
Diego |
3,598 |
3,671 |
2.0% |
$323,500 |
$325,000 |
0.5% |
|
Ventura |
802 |
879 |
9.6% |
$375,000 |
$365,000 |
-2.7% |
|
SoCal |
21,532 |
22,132 |
2.8% |
$300,000 |
$280,000 |
-6.7% |
Source: MDA DataQuick,
DQNews.com
-30-
Media calls: Andrew LePage
(916)456-7157