March 15, 2012La Jolla, CA.--Last month’s Bay Area home sales bounced up a bit more off bottom, fueled in large part by investors with cash who were buying discounted properties in the lower half of the price spectrum. The median price paid for a home dropped year-over-year for the 17th month in row, a real estate information service reported.
A total of 5,702 new and resale houses and condos sold in the nine-county Bay Area in February. That was up 4.1 percent from 5,479 in January, and up 14.2 percent from 4,991 in February 2011. The year-over-year sales increase was the eighth in a row, according to San Diego-based DataQuick.
A January-to-February sales increase is normal for the season. Last month’s sales count, which got a lift from an extra business day thanks to the leap year, was the highest for a February since 6,305 were sold in 2007. It was 9.0 percent below the February average of 6,268 sales going back to 1988. The sales pace for most months last year was 25 percent to 38 percent below average.
“The market is still strange, just a little less strange than it was. We also need to keep in mind that, when it comes to statistical trends, February is the least typical month of the year. Over the winter you’re left with a higher concentration of investors and people who must buy or sell because of a major life event. In the spring, when many traditional buyers return, we’ll get a much better read on the market. Meanwhile, many potential buyers are still waiting for the lending spigot to open more. Drum-tight credit conditions continue to undermine housing, along with negative equity and the various uncertainties plaguing would-be buyers,” said John Walsh, DataQuick president.
The median price paid for all new and resale houses and condos sold in the Bay Area last month was $325,500. That was down 0.3 percent from $326,000 in January, and down 3.6 percent from $337,250 in February 2011. The median has declined on a year over year basis every month since October 2010.
The low point of the current real estate cycle was $290,000 in March 2009. The peak was $665,000 in June/July 2007. Around half of the median’s peak-to-trough drop was the result of a decline in home values, while the other half reflected a shift in the sales mix.
Last month distressed property sales – the combination of foreclosure resales and “short sales” – made up about half of the Bay Area’s resale market.
Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 27.4 percent of resales in February. That was up from a revised 27.2 percent in January, and down from 32.6 percent a year ago. Foreclosure resales peaked in the current cycle at 52.0 percent in February 2009. The monthly average for foreclosure resales over the past 15 years is about 9 percent.
Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 23.1 percent of Bay Area resales last month. That was down slightly from an estimated 23.5 percent in January – the high point for this cycle – and up from 20.1 percent a year earlier.
Last month 28.0 percent of Bay Area sales were for $500,000 or more, up from a revised 27.4 percent in January, and down from 30.6 percent in February 2011. The low for the current cycle was January 2009, when just 22.7 percent of sales crossed the $500,000 threshold. Over the past 10 years, a monthly average of 47.7 percent of homes sold for $500,000-plus.
The number of homes that sold for $500,000 or more last month rose 1.8 percent from February 2011, while sales under $500,000 rose 14.9 percent year-over-year and sales below $300,000 increased 16.8 percent.
Government-insured FHA home purchase loans, a popular choice among first-time buyers, accounted for 23.2 percent of all Bay Area home purchase mortgages in February, up from 23.0 percent in January and 23.1 percent a year earlier.
One indicator of mortgage availability that had seen improvement last year was low again in February, when 11.8 percent of the Bay Area’s home purchase loans were adjustable-rate mortgages (ARMs). That was up from a revised 11.7 percent in January, and the same as in February last year. Over the last decade, ARMs have accounted for 50.8 percent of all purchase loans. ARMs hit a low of 3.0 percent of loans in January 2009.
Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 26.6 percent of last month’s purchase lending, up from a revised 23.5 percent in January, and down from 26.9 percent a year ago. Jumbo usage dropped to 17.1 percent in January 2009. Before the credit crunch struck in August 2007, jumbos accounted for nearly 60 percent of the Bay Area purchase loan market.
Last month absentee buyers – mostly investors – purchased a record 26.0 percent of all Bay Area homes sold, up from a revised 25.2 percent in January and 23.4 percent a year ago. The monthly average for absentee purchases is 14.2 percent since January 2000, when the absentee data series begins. Absentee buyers paid a median $230,000 in February, up from $225,000 in January and down from $243,000 a year ago.
Buyers who appear to have paid all cash – meaning no corresponding purchase loan was found in the public record – accounted for 32.0 percent of sales in February. That was an all-time high in DataQuick’s records back to 1988. Last month’s figure was up from 29.9 percent in January, and up from 30.6 percent a year ago. The monthly average going back to 1988 is 12.0 percent. Cash buyers paid a median $247,000 in February, up from $237,500 in January and down from $250,000 a year earlier.
San Diego-based DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Because of late data availability, sales were estimated in Alameda, San Francisco and San Mateo counties.
The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $1,225, down from $1,233 in January, and down from $1,440 a year ago. Adjusted for inflation, last month’s payment was a record low. It was 55.7 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 67.3 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 but below peak levels reached over the last three years. Financing with multiple mortgages is low, down payment sizes are stable, DataQuick reported.
See County chart at DQNews.com.
Source: DataQuick, http://www.dqnews.com/
Media calls: Andrew LePage (916) 456-7157