April 17, 2012La Jolla, CA---Southern California home sales shot up last month from February amid the usual surge in early-spring shopping, but the gain over a year earlier was modest. Sales of $500,000-plus homes, though a bit lower than last year, jumped 36 percent from February, helping to lift the region’s overall median sale price to a six-month high – and to about where it was in March 2011, a real estate information service reported.
A total of 19,953 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 28.1 percent from 15,573 in February, and up 2.8 percent from 19,412 in March 2011, according to San Diego-based DataQuick.
It’s normal for sales to jump between February and March. On average, they've risen 37.0 percent between those two months since 1988, when DataQuick’s statistics begin. On a year-over-year basis, Southland sales have increased for three consecutive months, and for seven out of the last eight months. However, last month’s Southland sales total was still 18.6 percent below the average for all the months of March since 1988.
As in recent months, March’s year-over-year gain in sales wasn't seen across the price spectrum. Last month the number of transactions below $300,000 rose 2.3 percent from a year earlier, while the number sold between $200,000 and $400,000 rose 4.2 percent. Sales between $300,000 and $800,000 fell 0.6 percent year-over-year, and sales above $800,000 dipped 5.6 percent.
March sales of newly built homes rose almost 9 percent from a year earlier, marking the second consecutive month with a year-over-year gain. But March’s new-home tally was still the second-lowest for that month in DataQuick’s records back to 1988. Last month’s sales of existing (not new) resale single-family detached houses were the highest for a March since 2010, while resale condo sales were the lowest for that month since 2009.
“The year is young and lots could still change, but the results from the first big sales month of 2012 suggest the market is stuck in low gear. This remains a very gradual – not to mention fragile – recovery. Last month's big gain in sales from February was seasonal. A lot more people get out and shop for a home as the weather warms. More telling was the relatively small gain in sales activity compared with a year ago. It's a reminder that, for many potential buyers, lower prices and amazingly low mortgage rates still aren’t enough to get them over their hurdles: Tight credit, home values below what they owe on their mortgages, and uncertainties over the economy and home prices,” said John Walsh, DataQuick president.
The median price paid for a Southland home last month was $280,000, up 5.8 percent from $264,750 in February but down 0.2 percent from $280,500 in March 2011. The March median was the highest since the median was also $280,000 last September. The year-over-year decline in the March median was the smallest since February 2011, when the $275,000 median was unchanged compared with a year earlier.
Last month’s median was 13.4 percent above the low point for the current real estate cycle – $247,000 in April 2009 – and 44.6 percent below the $505,000 peak in mid 2007. The peak-to-trough drop was due to a decline in home values as well as a shift in sales toward lower-cost homes, especially inland foreclosures.
Distressed sales made up about half of last month’s resale market.
Foreclosure resales – properties foreclosed on in the prior 12 months – accounted for 31.1 percent of the resale market last month, down from 32.1 percent in February and down from 36.0 percent a year earlier. Last month’s figure was the lowest since foreclosure resales were 28.6 percent of the resale market in January 2008. In the current cycle, the figure 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 18.9 percent of Southland resales last month. That compares with 20.4 percent the month before and 18.5 percent a year earlier.
Credit remains tight. But the influx of more traditional buyers into the housing market during late winter and early spring brought slightly higher levels of adjustable-rate financing and “jumbo” loans last month.
Adjustable-rate mortgages (ARMs) accounted for 6.2 percent of last month’s Southland home purchase loans, up from 5.8 percent the prior month and down from 7.9 percent a year earlier. Since 2000, a monthly average of about 36 percent of purchase loans were ARMs.
Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 16.4 percent of last month’s purchase lending, up from 14.4 percent the month before and 16.2 percent a year earlier. In the months leading up to the credit crisis that struck in August 2007, jumbos accounted for 40 percent of the market.
Investor activity held near record-high levels in March, and cash buying was more than double the historical average.
Absentee buyers – mostly investors and some second-home purchasers – bought 27.9 percent of the Southland homes sold last month. That was down from a record 29.9 percent the prior month but up from 26.2 percent a year earlier. Last month’s absentee buyers paid a median $210,000, up from $197,750 the month before and down from $215,000 a year earlier. The Inland Empire saw absentee buying ease slightly last month to 35.5 percent of all homes sold, down from a record 37.3 percent in February and up from 26.2 percent a year earlier. Since 2000, the Southland’s absentee buyers have purchased a monthly average of 17.1 percent of all homes sold.
Cash purchasers accounted for 31.7 percent of March home sales, down from a record 33.7 percent the month before and up from 31.2 percent a year earlier. Cash buyers paid a median $214,000 last month, up from $210,000 the prior month and up from $211,000 a year earlier. Since 2000, the monthly average for Southland homes purchased with cash is 15.2 percent. Cash purchases are where there was no indication in the public record that a corresponding purchase loan was recorded.
Government-insured FHA loans, a popular low-down-payment choice among first-time buyers, accounted for 30.1 percent of all purchase mortgages in March. Last month’s FHA level, which was the lowest for any month since August 2008, compared with 30.9 percent the month before and 31.7 percent a year earlier.
In March, 19.1 percent of all Southland home sales were for $500,000 or more – the highest level since last September, when it was 20.4 percent. Over-$500,000 sales made up 17.4 percent of all transactions the prior month and 20.3 a year earlier. The low point for $500,000-plus sales was in January 2009, when only 13.8 percent of sales were above that threshold. Over the past decade, a monthly average of 28.1 percent of homes sold for $500,000 or more.
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 that Southland buyers committed themselves to paying was $1,063 last month, compared with $998 in February. Last month’s figure was down from $1,185 for the same month last year. Adjusted for inflation, current payments are 54.8 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 63.0 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 is lower than peak levels reached over the last few years. Financing with multiple mortgages is very low, and down payment sizes are stable, DataQuick reported.
County chart is available at DQNews.com
Source: DQNews.com Media calls: Andrew LePage (916) 456-7157
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