Wednesday, October 16, 2013 DQNews.com
Southern California home sales in September fell more than usual from August but rose modestly above a year earlier as sales gains for mid- to high-priced properties compensated for declines in sub-$300,000 activity. The median sale price remained 21 percent higher than a year earlier, but after holding steady for three months the median dipped month-to-month in September for the first time since February, a real estate information service reported.
A total of 19,112 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 17.1 percent from 23,057 sales in August, and up 7.0 percent from 17,859 sales in September 2012, according to San Diego-based DataQuick.
On average, Southland sales have declined 9.3 percent between August and September since 1988, when DataQuick’s statistics begin.
Last month’s sales were 19.9 percent below the average number of sales – 23,862 – in the month of September. Southland sales haven’t been above average for any particular month in more than seven years. September sales have ranged from a low of 12,455 in September 2007 to high of 37,771 in September 2003.
The median price paid for all new and resale houses and condos sold in the six-county region last month was $382,000, down 0.8 percent from $385,000 in August and up 21.3 percent from $315,000 in September 2012. The $385,000 median in June, July and August was the highest in more than five years.
The median price has risen on a year-over-year basis for 18 consecutive months. Those gains have been double-digit – between 10.8 percent and 28.3 percent – over the past 14 months, and they have been greater than 20 percent for the last nine months.
September’s median remained 24.4 percent below the peak $505,000 median in spring/summer 2007.
“We’ve seen a fairly normal downshifting in the housing market this fall. Couple that with the rise in inventory, higher mortgage rates and the ongoing, gradual drop in purchases by investors and cash buyers and it’s no wonder prices have leveled off in recent months. What’s not clear is how well the market can weather the job losses related to the federal government shutdown and the blow to consumer confidence caused by fears of a default in the national debt. Those impacts would start to show up in data released over the next couple of months,” said John Walsh, DataQuick president.
It appears that most of last month’s 21.3 percent year-over-year increase in the Southland median sale price reflects rising home prices, while a small portion reflects a change in market mix. (This mix change consists of a big increase in mid- to high-end sales over the last year and a big decline in sales of lower-cost distressed properties.)
In September, the lowest-cost third of the region’s housing stock saw a 23.2 percent year-over-year rise in the median price paid per square foot for resale houses. The annual gain was 24.8 percent for the middle third of the market and 18.5 percent for the top, most-expensive third.
Sales activity in the middle and upper price ranges continues to far outpace sales in the more affordable markets.
Last month the number of homes that sold from $300,000 through $800,000 – a range that would include many move-up buyers – rose 25.5 percent year-over-year. The number that sold for $500,000 or more jumped 42.1 percent from one year earlier, while $800,000-plus sales rose 43.4 percent.
In September, 32.7 percent of all Southland home sales were for $500,000 or more, down from a revised 33.3 percent of sales the month before and up from 23.9 percent a year earlier.
The number of Southland homes that sold below $200,000 last month dropped 36.5 percent year-over-year, while sales below $300,000 fell 25.3 percent. Low-end sales have been relatively weak largely because of an inadequate supply of homes for sale. Many owners still can’t afford to sell their homes because they owe more than they are worth, and lenders aren’t foreclosing on as many properties, further limiting supply.
In September, foreclosure resales – homes foreclosed on in the prior 12 months – accounted for 6.3 percent of the Southland resale market. That was down from a revised 6.9 percent the month before and down from 16.6 percent a year earlier. Last month’s foreclosure resale rate was the lowest since it was 5.5 percent in May 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 13.1 percent of Southland resales last month. That was the lowest level since it was 12.9 percent in May 2009. Last month’s short sale figure was down from an estimated 13.3 percent the month before and down from 28.0 percent a year earlier.
Absentee buyers – mostly investors and some second-home purchasers – bought 26.3 percent of the Southland homes sold last month, which is the lowest share for any month since it was 25.1 percent in November 2011. Last month’s level was down from a revised 26.7 percent the month before and down from 27.7 percent a year earlier. The absentee share has ratcheted down gradually each month this year since hitting a record 32.4 percent in January. The monthly average since 2000, when the absentee data begin, is 18.4 percent. Last month’s absentee buyers paid a median $305,000, down from $310,000 the month before and up 27.6 percent from a year earlier.
After hitting a peak earlier this year, the share of homes flipped had generally trended flat to lower, but rose modestly in September. Last month 6.2 percent of all Southland homes sold on the open market had previously sold in the prior six months. That’s up from 5.9 percent in August and up from 5.5 percent in September 2012. (The figures exclude homes resold after being purchased at public foreclosure auction sales on the courthouse steps).
Buyers paying with cash accounted for 27.6 percent of last month’s home sales, down from 28.4 percent the month before and down from 32.2 percent a year earlier. The cash share of purchases has declined each month since hitting an all-time peak of 36.9 percent this February, and in September was at its lowest level since it was 26.2 percent in September 2010. Since 1988 the monthly average for cash buyers is 16.2 percent of all sales. Cash buyers paid a median $335,000 last month, up 35.6 percent from a year ago.
Credit conditions showed little change last month.
In September, 11.9 percent of Southland home purchase loans were adjustable-rate mortgages (ARMs) – the highest for any month since ARMs were 12.6 percent of the market in July 2008. Last month’s ARM level was up from an ARM share of 11.7 percent the prior month and 5.8 percent a year earlier. Since 2000, a monthly average of about 31 percent of Southland purchase loans have been ARMs.
Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 26.5 percent of last month’s Southland purchase lending. That was down from 27.6 percent the prior month and up from 20.7 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.
The most active lenders to Southern California home buyers last month were Wells Fargo with 8.7 percent of the purchase loan market, Bank of America with 2.6 percent and JP Morgan Chase with 2.5 percent.
All lenders combined provided $6.02 billion in mortgage money to Southern California home buyers in September, down from $6.58 billion in August and up from $4.47 billion in September last year.
Government-insured FHA loans, a popular low-down-payment choice among first-time buyers, accounted for 19.0 percent of all purchase mortgages last month. That was down slightly from 19.1 percent the month before and down from 25.7 percent a year earlier. In recent months the FHA share has been the lowest since spring 2008. The decline reflects tighter FHA qualifying standards implemented in recent years as well as the difficulties first-time buyers have competing with investors and cash buyers.
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 $1,547, down from $1,555 the month before and up from $1,144 a year earlier. Adjusted for inflation, last month’s typical payment was 35.5 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 47.2 percent below the current cycle’s peak in July 2007.
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, DataQuick reported.
To view the county-by-county chart, visit DQNews.com.