April 17, 2013 DQNews.com
The median price paid for a Southern California home hit a 56-month high in March, rising 23.4 percent from a year earlier as the impact of foreclosures continued to fade and sales of mid- to high-end homes shot up. Total sales were the highest in six years for a March despite a sharp drop in sub-$300,000 deals, a real estate information service reported.
A total of 20,581 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 29.1 percent from 15,945 sales in February, and up 3.1 percent from 19,953 sales in March 2012, according to San Diego-based DataQuick.
Sales normally jump between February and March, with that month-to-month gain averaging 36.4 percent since 1988, when DataQuick’s statistics begin.
Last month’s sales were the highest for the month of March since 21,856 Southland homes sold in March 2007, but they were still 15.1 percent below the March average of 24,254 sales. The low for March sales was 12,808 in 2008, while the high was 37,030 in March 2004.
The median price paid for all new and resale houses and condos sold in the six-county Southland was $345,500 last month, up 8.0 percent from $320,000 in February and up 23.4 percent from $280,000 in March 2012. Last month’s median was the highest since July 2008, when it was $348,000.
The median has risen on a year-over-year basis for 12 consecutive months, and those gains have been double-digit – between 10.8 percent and 23.5 percent – since last August.
“It’s remarkable how much the housing scene has changed in a year. At this point in 2012 there were still plenty of folks sitting on the market’s sidelines, waiting to be sure the recovery was real. But gradually the psychology shifted as the economy picked up steam and mortgage rates fell to historic lows. We’re seeing the release of a lot of pent-up demand, especially in the middle and higher-priced neighborhoods where activity had been sluggish for years,” said John Walsh, DataQuick president.
“Price measures continue to rise for two simple reasons,” Walsh added. “First, demand for homes has risen at a time when the available supply is unusually low. Prices have had nowhere to go but up in many areas. Second, the gains are especially high right now because of the change in market mix: Sales of lower-cost homes have fallen at the same time activity in the higher price ranges has risen.”
It appears that better than half of last month’s 23.4 percent year-over-year gain in the Southland median sale price reflects rising home prices, with the balance reflecting the change in market mix.
Some of the biggest price gains have come in the lower end of the market, which was hit hardest by foreclosures and price declines during the downturn. In March, the lowest-cost third of Southern California’s housing stock saw a 24.6 percent year-over-year increase in the median price paid per square foot for resale houses. The gain from a year earlier was 17.1 percent for the middle third of the market and 14.3 percent for the top third.
Sales continued to surge in move-up markets last month. The number of homes sold in March for between $300,000 and $800,000 – a range that would include many move-up buyers – rose 29.5 percent year-over-year. The number of homes sold for $500,000 or more jumped 40.2 percent from one year earlier, while sales of $800,000-plus homes increased 33.4 percent year-over-year.
Last month, 27.2 percent of all Southland home sales were for $500,000 or more, compared with a revised 24.4 percent in February and 19.6 percent a year earlier.
Sales continued to fall on a year-over-year basis in many lower-cost communities. The number of homes that sold below $200,000 last month declined 33.3 percent year-over-year, while sales below $300,000 dipped 24.5 percent. Sales in many affordable markets have been limited not by a lack of demand, but by a lack of supply. The latter has two main causes: First, a relatively high percentage of owners can’t afford to put their homes up for sell because they owe more than the homes are worth. Second, foreclosures are way down.
Last month foreclosure resales – homes foreclosed on in the prior 12 months – accounted for 13.9 percent of the Southland resale market. That was down from 16.2 percent the month before and down from 31.5 percent a year earlier. Last month’s figure was the lowest since it was 13.6 percent in September 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 21.5 percent of Southland resales last month. That was down from an estimated 22.3 percent the month before and 24.6 percent a year earlier.
The share of investor and cash buying remained near all-time highs.
Absentee buyers – mostly investors and some second-home purchasers – bought 30.6 percent of the Southland homes sold last month. That was down from 32.3 percent in February and up from 28.2 percent a year earlier. The record was 32.4 percent in January, while the monthly average since 2000, when the absentee data begin, is 18.0 percent. Last month’s absentee buyers paid a median $274,000, up 29.2 percent from a year earlier.
The share of homes flipped has trended higher in recent months, though it edged lower last month. In March, 6.1 percent of all Southland homes sold on the open market had previously sold in the prior six months, down from a flipping rate of 6.7 percent in February and up from 4.0 percent a year ago. (The figures exclude homes that were resold after being purchased at public foreclosure auction sales on the courthouse steps.)
Buyers paying with cash accounted for 34.1 percent of last month’s home sales, compared with a record 36.9 percent the month before and 32.4 percent a year earlier. Since 1988 the monthly average is 16.0 percent. Cash buyers paid a median $280,750 last month, up 30.6 percent from a year ago.
Credit conditions have shown signs of modest improvement.
Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 23.8 percent of last month’s Southland purchase lending – the highest since September 2007, when jumbos made up 26.9 percent of the market. Last month’s figure was up from 21.1 percent the prior month and 16.4 percent a year earlier. In the months leading up to the credit crunch that struck in August 2007, jumbos accounted for around 40 percent of the home loan market.
With fixed rates on 30-year loans so low, and aversion to risk in the marketplace high, the use of adjustable-rate mortgages (ARMs) remains very low in an historical context. Last month 7.4 percent of Southland home purchase loans were ARMs, up from 5.6 percent the prior month and up from 6.2 percent a year earlier. Last month’s figure was the highest since ARMs were 8.5 percent of the purchase loan market in August 2011. Since 2000, a monthly average of about 33 percent of Southland purchase have been ARMs.
The most active lenders to Southern California home buyers last month were Wells Fargo with 8.2 percent of the purchase loan market, imortgage.com with 2.8 percent, and both Prospect Mortgage and Bank of America with 2.4 percent.
Government-insured FHA loans, a popular low-down-payment choice among first-time buyers, accounted for 22.9 percent of all purchase mortgages last month. That was down from 24.6 percent the month before and 30.0 percent a year earlier. In recent months the FHA share has been the lowest since summer 2008. The decline reflects tighter FHA qualifying standards implemented in recent years as well as the difficulties first-time buyers are having competing with investors.
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 Southland buyers committed themselves to paying last month was $1,252, up from $1,154 the month before and up from $1,063 a year earlier. Adjusted for inflation, last month’s typical payment was 47.8 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 57.3 percent below the current cycle’s peak in July 2007.
Indicators of market distress continue to move in different directions. 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, DataQuick reported.