April 15, 2014
La Jolla, CA—Southern California home sales quickened last month compared with February, as they normally do, but remained far below average and at the lowest level for a March in six years. The median sale price rose to a more-than-six-year high, driven up by demand that continues to exceed supply in many areas, as well as a shift toward a greater share of sales in middle and high-end markets, a real estate information service reported.
A total of 17,638 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 25.7 percent from 14,027 sales in February, and down 14.3 percent from 20,581 sales in March last year, according to San Diego-based DataQuick.
For seasonal reasons sales shoot up between February and March, with that gain averaging 36.3 percent since 1988, when DataQuick’s statistics begin. Southland sales have fallen on a year-over-year basis for six consecutive months, and last month was the second in a row in which sales were at the lowest level for that particular month in six years.
Sales during the month of March have ranged from a low of 12,808 in 2008 to a high of 37,030 in 2004. Last month’s sales were 26.9 percent below the average number of sales – 24,115 – for March since 1988. Sales haven’t been above average for any month in more than seven years.
“Southland home buying got off to a very slow start this year, with last month’s sales coming in at the second-lowest level for a March in nearly two decades. We see multiple reasons for this: The inventory of homes for sale remains thin in many markets. Investor purchases have fallen. The jump in home prices and mortgage rates over the past year has priced some people out of the market, while other would-be buyers struggle with credit hurdles. Also, some potential move-up buyers are holding back while they weigh whether to abandon a phenomenally low interest rate on their current mortgage in order to buy a different home,” said DataQuick analyst Andrew LePage.
The median price paid for all new and resale houses and condos sold in the six-county region last month was $400,000, up 4.4 percent from $383,000 in February and up 15.8 percent from $345,500 in March 2013. Last month’s median was the highest since it was $408,000 in February 2008.
The median has risen on a year-over-year basis for 24 consecutive months. Those gains have been double-digit – between 10.8 percent and 28.3 percent – over the past 20 months. The 15.8 percent year-over gain in the median last month marked the lowest increase for any month since September 2012, when the $315,000 median rose 12.5 percent from a year earlier.
The March median sale price stood 20.8 percent below the peak $505,000 median in spring/summer 2007.
DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. DataQuick was acquired last month by Irvine-based property information company CoreLogic.
Home prices continue to rise at different rates depending on price segment. In March, the lowest-cost third of the region’s housing stock saw a 21.0 percent year-over-year increase in the median price paid per square foot for resale houses. The annual gain was 15.9 percent for the middle third of the market and 14.3 percent for the top, most-expensive third.
Last month the number of homes that sold for $500,000 or more increased 2.9 percent from one year earlier, while $800,000-plus sales rose 5.4 percent. Sales below $500,000 fell 26.4 percent year-over year, while sales below $200,000 plunged 45.7 percent.
In March, 35.1 percent of all Southland home sales were for $500,000 or more, up from 33.5 percent the month before and up from 27.8 percent a year earlier.
The impact of distressed properties continued to wane.
Foreclosure resales – homes foreclosed on in the prior 12 months – accounted for 6.4 percent of the Southland resale market in March. That was down from a revised 6.7 percent the prior month and down from 13.8 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 7.7 percent of Southland resales last month. That was down from a revised 9.3 percent the prior month and down from 18.7 percent a year earlier.
Absentee buyers – mostly investors and some second-home purchasers – bought 27.4 percent of the homes sold last month, down from 28.9 percent in February and down from 31.2 percent a year earlier. The monthly average since 2000, when the absentee data begin, is 18.7 percent. The number of homes purchased by absentee buyers in March fell nearly 30 percent from a year earlier and was at its lowest level for a March since 2010. Last month’s absentee buyers paid a median $337,500, up 22.7 percent year-over-year.
In March 5.3 percent of all Southland homes sold on the open market were flipped, meaning they had previously sold in the prior six months. That’s down from a flipping rate of 6.1 the prior month and it’s down from 6.3 percent a year earlier. (The figures exclude homes resold after being purchased at public foreclosure auctions on the courthouse steps).
Buyers paying cash last month accounted for 29.1 percent of Southland home sales, down from 30.9 percent the month before and down from 35.1 percent in March last year. Since 1988 the monthly average for cash buyers is 16.5 percent of all sales. Cash buyers paid a median $365,000 last month, up 28.1 percent from a year earlier.
In March, Southern California home buyers forked over a total of $4.04 billion of their own money in the form of down payments or cash purchases. That was up from a revised $3.36 billion in February and down from $4.46 billion a year ago. The out-of-pocket total peaked last May at $5.41 billion.
Credit conditions appear to have eased in recent months, although they remain tight in an historical context.
Last month 13.3 percent of Southland home purchase loans were adjustable-rate mortgages (ARMs) – nearly double the ARM level of a year earlier. Last month’s figure was up from 12.9 percent in February and up from 7.4 percent in March 2013. 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 29.5 percent of last month’s Southland purchase lending. That was the highest level for any month since the credit crunch struck in August 2007. Last month’s figure was up from 27.2 percent the prior month and up from 23.8 percent a year earlier. Prior to the August 2007 credit crunch jumbos accounted for around 40 percent of the home loan market.
All lenders combined provided a total of $4.96 billion in mortgage money to Southern California home buyers in March, up from a revised $3.91 billion in February and down from $5.29 billion in March last year.
The most active lenders to Southern California home buyers last month were Wells Fargo with 7.1 percent of the total home purchase loan market, Bank of America with 3.0 percent and IMortgage with 2.4 percent.
Government-insured FHA loans, a popular low-down-payment choice among first-time buyers, accounted for 18.4 percent of all purchase mortgages last month. That was down from 18.9 percent the month before and down from 22.5 percent a year earlier. In recent months the FHA share has been the lowest since early 2008, mainly because of tighter FHA qualifying standards and the difficulties first-time buyers have competing with investors and cash buyers.
The typical monthly mortgage payment Southland buyers committed themselves to paying last month was $1,591, up from $1,516 the month before and up from $1,252 a year earlier. Adjusted for inflation, last month’s typical payment was 33.9 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 45.9 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 home sale chart, visit DQNews.com.