Strongest September for Bay Area Home Sales in Five Years; Prices Flat

October 14, 2014

http://dqnewspressreleases.blogspot.com/2014/10/september-bay-area-home-sales-press.html

Irvine, CA.—-The number of homes sold in the Bay Area last month edged up to its highest level for a September since 2009, the result of some spillover summer activity and sustained demand in a strong regional economy. Prices appear to have flattened out at a level reached this spring, Irvine-based CoreLogic DataQuick reported.

A total of 7,443 new and resale houses and condos sold in the nine-county Bay Area last month. That was down 1.8 percent from 7,578 in August and up 4.2 percent from 7,141 in September last year, according to CoreLogic DataQuick.

A decline in sales from August to September is normal for the season. Last month’s sales count was the highest for any September since 7,879 homes were sold in 2009. Sales for the month of September have varied from 5,014 in 2007 to 13,343 in 2003. The average since 1988, when CoreLogic DataQuick’s statistics begin, is 8,479.

The median price paid for a home in the nine-county Bay Area was $604,000 in September. That was down 0.5 percent from $607,000 in August, and up 14.0 percent from $530,000 in September last year. The median sale price lurched above $600,000 this April, when it was $610,000, and then reached a 2014 high of $618,000 in June. Since then the median has declined slightly on a month-to-month basis.

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.

“Some analysts are re-calculating what they consider to be normal sales levels, taking out the ‘loans-gone-wild’ years of over-available credit. And if you do that, current sales are right in the normal range. We still have issues today, though. The mortgage market is still dysfunctional. There are categories of buying and selling that are still inactive, and nobody really has any idea just how much pent-up demand there is out there,” said John Karevoll, CoreLogic DataQuick analyst.

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

Adjustable-rate mortgages (ARMs), an important indicator of mortgage availability, accounted for 24.4 percent of the Bay Area’s home purchase loans in September, up from a revised 23.6 percent in August, and up from 20.3 percent in September last year. ARMs hit a low of 3.0 percent of loans in January 2009. Since 2000, ARMs have accounted for 46.5 percent of all Bay Area purchase loans.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 55.7 percent of last month’s purchase lending, down from a revised 56.1 percent in August, and up from 46.7 percent a year ago. Jumbo usage dropped to as low as 17.1 percent in January 2009.

Last month foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 2.8 percent of resales, unchanged from a revised 2.8 percent the month before, and down from 3.6 percent a year ago. Foreclosure resales in the Bay Area peaked at 52.0 percent in February 2009, while the monthly average over the past 17 years is 9.7 percent, CoreLogic DataQuick reported.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 3.6 percent of Bay Area resales last month. That was down from an estimated 3.8 percent in August and down from 7.5 percent a year earlier.

Last month absentee buyers – mostly investors – purchased 19.1 percent of all Bay Area homes. That was up from August’s revised 18.6 percent, and down from 20.9 percent in September 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 20.9 percent of sales in September, down from a revised 21.8 percent in August and down from 23.3 percent a year earlier.

Bay Area home buyers used $2.13 billion of their own money in the form of a down payment or as an outright cash purchase last month. They borrowed $2.8 billion in mortgage money from lenders last month.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $2,340. Adjusted for inflation, last month’s payment was 19.4 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 39.1 percent below the current cycle’s peak in July 2007. It was 82.4 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, CoreLogic DataQuick reported. Because of late data availability, sales were estimated in Alameda, San Francisco and San Mateo counties.

To view the county-by-county chart, please visit DQNews.com.

California September Home Sales

October 14, 2014

http://dqnewspressreleases.blogspot.com/2014/10/september-california-home-sales-press.html

An estimated 36,316 new and resale houses and condos sold statewide in September. That was down 2.4 percent from 37,228 in August, and up 0.8 percent from 36,027 sales in September 2013, according to CoreLogic DataQuick data.

Last month’s slight year-over-year sales increase was the first in a year, and sales were the highest for the month of September in five years. September sales have varied from a low of 24,460 in 2007 to a high of 69,304 in 2003. Last month’s sales were 15.5 percent below the average of 42,996 sales for all the months of September since 1988, when Irvine-based CoreLogic DataQuick’s statistics begin. California sales haven’t been above average for any particular month in more than eight years.

The median price paid for a home in California last month was $389,000, down 1.0 percent from $393,000 in August and up 9.6 percent from $355,000 in September 2013. Last month was the 31st consecutive month in which the state’s median sale price rose year-over-year. In March/April/May 2007 the median peaked at $484,000. The post-peak trough was $221,000 in April 2009.

Of the existing homes sold last month, 5.3 percent were properties that had been foreclosed on during the past year. That was down from a revised 5.4 percent in August and down from 7.1 percent a year earlier. Foreclosure resales peaked at 58.8 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 5.9 percent of the homes that resold last month. That was the same as in August and down from 10.8 percent a year earlier.

The typical monthly mortgage payment that California buyers committed themselves to paying last month was $1,507, down from $1,523 the month before and up from $1,437 a year earlier. Adjusted for inflation, last month’s payment was 36.0 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 48.1 percent below the current cycle’s peak in June 2006. It was 60.5 percent above the January 2012 bottom of the current cycle.

Indicators of market distress continue to decline. Foreclosure activity remains well below year-ago and peak levels reached in the last five years. Financing with multiple mortgages is low, while down payment sizes are stable, CoreLogic DataQuick reported.

Source: CoreLogic DataQuick; DQNews.com

Golden State Foreclosure Starts Continue to Decline

October 17, 2014

http://dqnewspressreleases.blogspot.com/2014/10/3q2014-california-home-foreclosure.html

La Jolla, CA.–Lending institutions initiated formal foreclosure proceedings last quarter on the lowest number of California homes in more than eight years, the result of a recovering real estate market and the dwindling pool of toxic home loans made in 2006 and 2007, Irvine-based CoreLogic DataQuick reported.

A total of 16,833 Notices of Default (NoDs) were recorded at county recorders offices during the July-through-September period. That was down 3.9 percent from 17,524 for the prior quarter, and down 17.1 percent from 20,314 in third-quarter 2013, according to CoreLogic DataQuick data.

Last quarter’s NoD tally was the lowest since fourth-quarter 2005, when 15,337 NoDs were recorded. NoDs peaked in first-quarter 2009 at 135,431, while the low was 12,417 NoDs in third-quarter 2004. The NoD statistics go back to 1992.

A Notice of Default is recorded at a county recorder’s office and marks the first step of the formal foreclosure process.

“This home repo pipeline isn’t exactly drying up, but it sure is diminishing. Its negative effect on the overall market is only a fraction of what it was several years ago, and is really only still noticeable in some pockets of the hardest-hit markets of the Inland Empire and Central Valley,” said John Karevoll, a CoreLogic DataQuick analyst.

To some extent the level of NoD filings in recent quarters probably reflects the rate at which servicers are able to process paperwork. The 20,314 NoDs filed in third-quarter 2013 were followed by 18,120 the following quarter and then 19,215 in 2014Q1; 17,524 in 2014Q2; and 16,833 last quarter.

Most of the loans going into default are still from the 2005-2007 period. Last quarter the median origination quarter for defaulted loans was third-quarter 2006. That has been the case for more than five years, indicating that weak underwriting standards peaked then.

On primary mortgages, California homeowners were a median 12.5 months behind on their payments when the lender filed the Notice of Default. Borrowers owed a median $28,684 on a median $316,651 mortgage.

On home equity loans and lines of credit in default, borrowers owed a median $6,706 on a median $67,500 credit line. The amount of the credit line that was actually in use cannot be determined from public records.

The most active “beneficiaries” in the formal foreclosure process last quarter were Wells Fargo (2,244), Bank of America (1,372) and Nationstar (1,346).

The trustees who pursued the highest number of defaults last quarter were Quality Loan Service Corp (mostly for Wells Fargo), Clear Recon Corp (mostly Bank of America), and NBS Default Services (mostly Wells Fargo and Nationstar).

Although 16,833 default notices were filed last quarter, they involved 16,432 homes because some borrowers were in default on multiple loans (e.g. a primary mortgage and a line of credit).

Among the state’s larger counties, loans were least likely to go into default last quarter in Marin, Santa Clara and San Mateo counties. The probability was highest in Tulare, Madera and Fresno counties.

Lenders’ shift toward short sales as a foreclosure alternative has helped lower foreclosure activity in recent years. Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 5.5 percent of the state’s resale market last quarter. That was down from an estimated 6.1 percent the prior quarter and 11.3 percent a year earlier.

To view a county-by-county NOD chart, please visit DQNews.com.

Is the era of buying homes with cash coming to an end?

At lowest level since August 2008

Cash sales are slowly turning into the endangered species of the industry, reaching the lowest share since august 2008.

Tumbling 35.9% from July 2013, cash sales made up 32.9% of total home sales in July 2014, according to CoreLogic’slatest report on July’s cash sales.

On a monthly basis, the cash sales share was mostly flat, falling only one tenth of a percentage point from June 2014. But it is important to note that cash sales share comparisons should be made on a year-over-year basis due to the seasonal nature of the housing market.

Cash sales have fallen each month since January 2013, and prior to the housing crisis, the cash sales share of total home sales averaged approximately 25%.

The peak occurred in January 2011, when cash transactions made up 46.3% of total home sales.

“A trend to watch is the cash share of re-sales, which has fallen almost 15 percentage points from its peak cash share of 47.1% in February 2011,” the report said. “This category will determine the direction of cash sales going forward, since re-sales make up the largest share at 81% of all sales.”

(Source CoreLogic, click to enlarge)

Cash Sales

Zillow: Mortgage rates drop to 16-month low

30-year, fixed mortgage continues to fall

The interest rate for a 30-year, fixed-rate mortgage continued its decline last week, falling further below 4% last week and also falling to a 16-month low, according to a new report from Zillow (Z).

Current rate borrowers were quoted an average interest rate of 3.81% on Zillow’s Mortgage Marketplace in the week that ended Tuesday, down from 3.96% in the previous week.

According to Zillow’s report, the 30-year fixed mortgage rate fell last Wednesday, and then hovered around 3.88% for most of the week before falling to the current rate.

“Rates dropped to the lowest level since June 2013 on news that the Federal Reserve has more reservations about the health of the U.S. and global economy than expected, which in turn, may delay rate hikes,” said Erin Lantz, vice president of mortgages at Zillow.

“With little economic news planned to overshadow the Fed’s latest comments, this week we expect rates to fairly remain stable, hovering just shy of 4%.”

Zillow also reported that the 15-year fixed mortgage rate fell below 3% last week, to 2.96 as of Tuesday morning. The rate for 5/1 adjustable rate mortgages also fell from 2.83% to 2.7%.

Those numbers were also down from last week’s Primary Mortgage Market Survey from Freddie Mac.

In that report, Freddie Mac stated that the 30-year, fixed rate mortgage declined from 4.19% in the previous week to 4.12% and is significantly down from 4.23% a year ago.

According to Freddie’s data, the 15-year, FRM decreased to 3.30% after remaining frozen at 3.36% a week ago. This is close to 2013’s 15-year, FRM of 3.31%.

Southland Home Sales Edge Higher; Price Growth Slows

October 13, 2014

http://dqnewspressreleases.blogspot.com/2014/10/september-southland-home-sales-press.html

Irvine, CA—Southern California home sales hit a five-year high for a September, rising slightly above a year earlier for the first time in 12 months amid gains for mid- to high-end deals. The median sale price fell below an 80-month high reached in August and for the first time in more than two years none of the Southland counties posted a double-digit year-over-year price gain, CoreLogic DataQuick reported.

A total of 19,348 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 2.9 percent from 18,796 sales in August, and up 1.2 percent from 19,112 sales in September 2013, according to CoreLogic DataQuick data.

On average, sales have fallen 9.4 percent between August and September since 1988, when CoreLogic DataQuick statistics begin. Last month marked the first time sales have risen on a year-over-year basis since September last year, when sales rose 7.0 percent from September 2012.

September home sales have ranged from a low of 12,455 in 2007 to a high of 37,771 in 2003. Last month’s sales were 18.3 percent below the September average of 23,695 sales.

The median price paid for all new and resale houses and condos sold in the six-county region last month was $413,000, down 1.7 percent from $420,000 in August and up 8.1 percent from $382,000 in September 2013. The August 2014 median was the highest for any month since December 2007, when it was $425,000.

The median’s 8.1 percent year-over-year gain in September marked the fourth consecutive month with a single-digit annual increase following 22 straight months of double-digit gains of as much as 28.3 percent.

“Price appreciation has dipped into single-digit territory as more would-be buyers get priced out, investors back off and incomes rise modestly at best. Yet there are still upward forces on home prices: Jobs are being created and families started at a time when the supply of existing homes for sale, as well as the number of new homes being built, remains relatively low. The good news for those looking to buy a home now is that mortgage rates remain very low in an historical context, and we’re past the peak home-buying season. Today’s home shoppers are more likely to find a less-crowded market with fewer intense multiple-offer situations and more serious, realistic sellers,” said Andrew LePage, an analyst with Irvine-based CoreLogic DataQuick.

Last month was the first since June 2012 in which none of the six Southland counties posted a double-digit, year-over-year gain in its median sale price (all had single-digit increases). Orange County’s $585,000 September median was the closest – within 9.3 percent – to its all-time peak of $645,000 in June 2007.

For the Southland overall the September median stood 18.2 percent below the peak $505,000 median in spring/summer 2007.

Home prices have been rising at different rates depending on price segment. In September, the lowest-cost third of the region’s housing stock saw a 10.9 percent year-over-year increase in the median price paid per square foot for resale houses. The annual gain was 6.6 percent for the middle third of the market and 4.5 percent for the top, most-expensive third.

The number of homes that sold for $500,000 or more last month rose 9.0 percent compared with a year earlier. But sales below $500,000 fell 6.7 percent year-over-year. Sales below $200,000 dropped 24.7 percent. Sales in the lower price ranges are hampered by, among other things, the drop in affordability over the last year, a fussy mortgage market and a relatively low inventory of homes for sale.

In September, 36.7 percent of all Southland home sales were for $500,000 or more, down from 38.5 percent in August – an 81-month high – and up from 33.2 percent in September 2013.

Distressed property sales continued to play a lesser role in the market.

Foreclosure resales – homes foreclosed on in the prior 12 months – represented 4.7 percent of the Southland resale market last month. That was down from a revised 5.0 percent the prior month and down from 6.4 percent a year earlier. In recent months the foreclosure resale rate has been the lowest since early 2007. In the current cycle, foreclosure resales hit a high of 56.7 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 6.0 percent of Southland resales last month. That was up insignificantly from 5.9 percent the prior month and down from 10.9 percent a year earlier.

Absentee buyers – mostly investors and some second-home purchasers – bought 23.3 percent of the Southland homes sold last month. That was the lowest absentee share since October 2010, when 22.1 percent of homes sold to absentee buyers. Last month’s figure was down from 23.8 percent the prior month and down from 27.0 percent a year earlier. The peak was 32.4 percent in January 2013, while the monthly average since 2000, when the CoreLogic DataQuick absentee data begin, is about 19 percent.

Buyers paying cash accounted for 24.3 percent of September home sales, down from a revised 24.5 percent in August and down from 28.7 percent in September last year. Last month’s figure was the lowest since June 2010, when 24.2 percent of Southland homes were bought with cash. The peak was 36.9 percent in February 2013, and since 1988 the monthly average is 16.7 percent.

In September, Southern California home buyers committed a total of $4.03 billion of their own money in the form of down payments or cash purchases. That was down from a revised $4.51 billion in August. The out-of-pocket total peaked in May 2013 at $5.41 billion.

Although credit conditions remain fairly tight, the use of larger “jumbo” home loans and adjustable-rate mortgages has generally trended higher this year compared with last, edging toward more normal levels.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 28.1 percent of last month’s Southland purchase lending, the same as the month before and up from 26.5 percent a year earlier. The July 2014 level of 32.3 percent was the highest since the credit crunch struck in August 2007. Prior to August 2007 jumbos accounted for around 40 percent of the home loan market. The jumbo level dropped to as low as 9.3 percent in January 2009.

In September, 13.4 percent of Southland home purchase loans were adjustable-rate mortgages (ARMs), the same as the August ARM rate and up from a year earlier, when 12.0 percent of purchase loans were ARMs. The ARM share dropped to as low as 1.9 percent of home purchase loans in May 2009. Since 2000, a monthly average of about 30.2 percent of Southland purchase loans have been ARMs.

All lenders combined provided a total of $5.85 billion in mortgage money to Southern California home buyers in September, down from a revised $6.2 billion in August and up from $5.43 billion in September last year.

The typical monthly mortgage payment Southland buyers committed themselves to paying last month was $1,608, down from $1,624 the month before and up from $1,547 a year earlier. Adjusted for inflation, last month’s typical payment was 34.1 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 46.0 percent below the current cycle’s peak in July 2007.

To view the county-by-county home sale chart, please visit DQNews.com.

Source: DQNews.com Media calls: Andrew LePage (916) 456-7157

Copyright 2014 DataQuick. All rights reserved.

Clear Capital: No bounty for housing harvest

Western housing region could be canary in the coal mine

Clear Capital’s home data index suggests that as the housing industry heads into fall, the Western region could be the canary in the coalmine.

September home price data marks the 11th straight month of moderating gains.

Nationally, yearly gains decreased from a high of 11.7% in October 2013 to just 7.8% through September 2014.

This trend is amplified in the West, where annual gains are cut nearly in half, from highs of 19.5% in October 2013 to 10.9% in September 2014. If the ongoing moderation in the West, still the recovery leader, continues at its current pace it will be a foreboding sign of future declines.

“Heading into fall, home price gains continue to drop,” said Alex Villacorta, vice president of research and analytics at Clear Capital. “September marks the 11th month of moderating gains with home price levels back in line with long run averages. With less fuel stoking investors’ fire and the consumer yet to feel confident in the market, we expect at best either a return to pre-bubble norms or a departure into negative territory.

“While the housing market has enjoyed abnormally high rates of growth during the last two and a half years of recovery, prices are back to long run historic levels, signaling an effective end to the correction to the correction. True market growth will be dependent on consumer confidence and re-engagement which will be tested over the next few months,” he said.

Metro market trends will continue to keep buyers on their toes, as national and regional recoveries wane at varying velocities. Detroit is a great example. Discounted opportunities helped push prices up 21.9% year-over-year in September.

Meanwhile the Hartford MSA is experiencing declines, -1.1% over the quarter and -0.4% over the year, highlighting the type of market performance disparity that characterizes the present market. Each of the lowest performing 15 markets posted less than a 1% gain over the last quarter. This group remains subject to short term declines which could eventually turn into yearly losses.

Distressed inventory is no longer reinforcing a strong housing market recovery. Discounted distressed deals continue to dry up, down from a national high of 38.4% in 2011 to just 16.5% in September 2014. While this is generally a positive sign, distressed sales helped drive the investor demand that kick started the recovery. Historically, we’ve observed rising prices as distressed saturation declined. While reduction of distressed saturation is a healthy move for markets long term, over the short term it removes a key demand segment at a time when full buyer momentum has yet to be established. The correlation between drastic declines in price gains and declines in distressed saturation is most visible in the West. Distressed saturation was at an all-time high of 50.5% in 2009 falling to just 12.6% in September 2014.

As distressed saturation fell, so did price gains. Yearly price gains in the West have fallen to 10.9%. This nearly 50% drop in price gains since October 2013 is in sync with declines in distressed saturation.

Perception is reality—for consumer confidence in housing. Future home price gains are more dependent on owner occupied purchases as the rising price floor and dwindling discounted deals leave investors with fewer opportunities. Owner occupied demand is in part driven by consumer sentiment, among other key drivers, like jobs.

While consumer sentiment levels reached a 14-month high in September, according to the University of Michigan’s Consumer Sentiment index, momentum has tempered—like home prices.