Bay Area Posts Highest July Home Sales in Eight Years
August 15, 2013
La Jolla, CA.--The number of homes sold in the Bay Area jumped last month to the highest level for a July since 2005 and the highest level for any month in almost seven years. Amid favorable market conditions, the burst of activity reflects pent-up demand meeting an increasing supply of homes for sale, a real estate information service reported.
A total of 9,339 new and resale houses and condos sold in the nine-county Bay Area in July. That was up 18.3 percent from 7,897 the month before, and up 13.3 percent from 8,241 in July 2012, according to San Diego-based DataQuick. It was the highest July sales since 12,538 homes sold in July 2005, and the highest for any month since August 2006, when 9,713 homes sold.
Last month’s 9,339 sales almost reached the average of 9,366 sales for all months of July since 1988, when DataQuick’s statistics begin. July sales have ranged from 6,666 in 1995 to 14,258 in 2004.
“There’s all this talk of a frenzy, but the fact is that we’re still looking at a Bay Area housing market that is in the process of re-balancing itself, regaining lost ground. As prices continue to rise, more homes will be put up for sale, easing the upward price pressure,” said John Walsh, DataQuick president.
The median price paid for a home in the Bay Area last month was $562,000, the highest since it was $587,500 in December 2007. Last month’s median was up 1.3 percent from $555,000 in June, and up 33.5 percent from $421,000 in July 2012.
The Bay Area median peaked at $665,000 in June and July 2007, then dropped as low as $290,000 in March 2009. Much of the median's ups and downs can be attributed to shifts in the types of homes sold. When adjusting for these shifts, it appears that about three fourths of July’s 33.5 percent year-over-year rise in the median was an actual increase in home values, while the rest was market mix.
In a sign of market confidence, Bay Area home buyers continued to put near-record amounts of their own money into residential real estate. In July they paid a total of $2.3 billion out of their own pockets in the form of down payments or cash purchases. That was about the same as the month before and was up from $1.9 billion a year ago. It was down from this May's all-time high of $2.6 billion.
Sales continued to rise sharply from a year earlier in mid- to high-priced areas, while they tended to fall in the most affordable markets. The number of homes sold in July for less than $500,000 dropped 14.6 percent year-over-year, while the number sold for more increased 55.9 percent, DataQuick reported.
Last month distressed property sales – the combination of foreclosure resales and “short sales” – made up about 14.8 percent of the resale market. That was down from about 17.0 percent in June and down from about 38.9 percent a year ago.
Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 4.8 percent of resales in July, down from a revised 6.0 percent in June, and down from 15.1 percent a year ago. Last month was the lowest since 4.4 percent in August 2007. Foreclosure resales peaked at 52.0 percent in February 2009. The monthly average for foreclosure resales over the past 17 years is about 10 percent.
Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 10.0 percent of Bay Area resales last month. That was down from an estimated 11.3 percent in June and down from 23.7 percent a year earlier.
Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 51.0 percent of last month’s purchase lending, roughly even with a revised 50.9 percent in June, and up from 38.6 percent a year ago. Jumbo usage dropped to as low as 17.1 percent in January 2009.
Adjustable-rate mortgages (ARMs), an important indicator of mortgage availability, accounted for 19.2 percent of the Bay Area’s home purchase loans in July. That was the highest since 20.8 percent in August 2008. It was up from a revised 16.9 percent in June, and up from 13.5 percent in July last year. Since 2000, ARMs have accounted for 47.7 percent of all purchase loans. ARMs hit a low of 3.0 percent of loans in January 2009.
Government-insured FHA home purchase loans, a popular choice among first-time buyers, accounted for 10.6 percent of all Bay Area purchase mortgages in July, about even with a revised 10.4 percent in June and down from 16.0 percent a year earlier. In recent months the FHA level has been the lowest since spring 2008, reflecting both tougher qualifying standards and the difficulties first-time buyers have competing with investors and other cash buyers.
Absentee buyers – mostly investors – purchased 20.9 percent of all Bay Area homes that sold last month. That was down from a revised 21.6 percent in June, and down from 22.6 percent a year ago. The absentee share has trended downward since hitting an all-time peak of 28.7 percent in February this year. The monthly average since 2000, when the absentee series begins, is 15.2 percent. Absentee buyers paid a median $412,000 in July, up 55.5 percent from a year earlier.
Buyers who appear to have paid all cash – meaning no sign of a corresponding purchase loan was found in the public record – accounted for 24.0 percent of sales in July. That was down from a revised 25.0 percent the month before and down from 27.6 percent a year earlier. The cash buyer share of sales has declined each month this year since hitting its peak of 32.3 percent in February. The monthly average going back to 1988 is 13.2 percent. Cash buyers paid a median $441,500 in July, up 54.4 percent from 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 $2,243. Adjusted for inflation, last month’s payment was 21.2 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 44.5 percent below the current cycle's peak in July 2007. It was 78.4 percent above the February 2012 bottom of the current cycle.
Indicators of market distress continue to decline. Foreclosure activity remains high by historical standards but well below peak levels reached three years ago. Financing with multiple mortgages is low, down payment sizes are stable, DataQuick reported.
View the county-by-county chart at DQNews.com.