September 2010 Bay Area residential home sales hit their lowest level for the month since 2007, with home sales declining year over year for the fourth consecutive month. At the same time, median home prices in the Bay Area rose for the twelfth consecutive month. See the following article from DQNews for more on this.
Bay Area home sales fell year-over-year for the fourth consecutive month in September, dropping 27 percent below average, as historically-low mortgage rates failed to nudge many would-be buyers off the sidelines. The region’s median sale price stood 8 percent higher than a year ago, but price signals were mixed at the county level, a real estate information service reported.
A total of 6,334 new and resale houses and condos closed escrow in the nine-county Bay Area last month, down 5.4 percent from 6,698 in August and down 19.6 percent from 7,879 in September 2009, according to MDA DataQuick of San Diego.
Last month’s sales were the lowest for any September since 2007, when 5,014 homes sold, and were the second-lowest since September 1991, when 5,735 sold. September sales fell 26.7 percent below the average September sales tally of 8,641 since 1988, when DataQuick’s statistics begin. September sales have ranged from a low of 5,735 in 1991 to a high of 13,343 in 2003.
“The sidelines are getting awfully crowded in this housing game. They’re lined with people who have the ability to buy now but are waiting for the right moment, and with people who have the means but lack job confidence. Then you have all of the folks who don’t have the equity, don’t have a job or can’t qualify for the larger, so-called jumbo mortgages that were once so common in the Bay Area,” said John Walsh, MDA DataQuick president.
“Sales have been so low for so long – 27 percent below average last month – that significant pent-up demand is accumulating. When it will be released will depend largely on when the economy rebounds more convincingly, spurring more jobs and higher consumer confidence. If, in the meantime, prices fall more and interest rates stay the same or edge lower, then it’s easy to imagine a burst of sales activity at some point. Next spring could be very interesting.”
The market effects from the latest chapter in the nation’s foreclosure crisis – reports of mishandled mortgage and foreclosure documents – remain unclear.
Last month the median paid for all new and resale houses and condos combined in the Bay Area was $395,000, up 2.6 percent from $385,000 in August and up 8.2 percent from $365,000 in September 2009.
On a year-over-year basis, the Bay Area median has risen for 12 straight months, though before July those increases had been in the double digits since last November, ranging from 10.6 percent to 31.0 percent.
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So far this year, the median has peaked at $410,000, in both May and June.
Last month there was variation in the year-over-year change in the all-home median sale price among the region’s nine counties. Napa and San Francisco counties logged annual declines of 6.4 percent and 4.6 percent, respectively. All other counties saw year-over-year gains ranging from 0.3 percent to 11.1 percent.
Looking specifically at existing (not new) single-family detached houses, several counties saw their medians drop year-over-year. Napa, San Francisco and San Mateo counties saw declines in their existing house median of 3.3 percent, 2.9 percent and 2.3 percent, respectively. All other counties saw year-over-year gains of between 0.5 and 14.3 percent for that home-type category.
In September, the Bay Area’s overall median sale price of $395,000 for all homes sold stood 40.6 percent below the $665,000 peak in June/July 2007. The post-housing-boom low was $290,000 in March 2009. The regional median’s peak-to-trough plunge was caused by a decline in home values as well as a huge shift in sales toward lower-cost homes, especially inland foreclosures.
Last month foreclosure resales – homes that had been foreclosed on in the prior 12 months – rose to 27.9 percent of the Bay Area’s resale market. That was up from 26.1 percent in August but down from 32.3 percent in September 2009. Foreclosure resales peaked at 52.0 percent in February 2009. The monthly average for foreclosure resales over the past 15 years is about 8 percent.
Government-insured FHA loans, a popular choice among first-time buyers, accounted for 25.1 percent of all home purchase mortgages in September, up from 24.8 percent in August and 24.9 percent in September 2009.
Last month 38.7 percent of all sales were for $500,000 or more, down a tad from 38.9 percent in August but up from 36.3 percent a year ago. The low point for $500,000-plus sales was January 2009, when 22.7 percent of sales crossed that threshold. Over the past decade, a monthly average of 45.2 percent of homes sold for $500,000 or more.
Viewed differently, sales of existing single-family houses in zip codes representing the top one-third of the market, based on historical prices, accounted for 35.1 percent of all sales in September, up from 34.8 percent in August and 31.3 percent a year ago. Those higher-end areas’ contribution to regional sales had dropped as low as 18.0 percent in January 2009, while the peak was 44.7 percent in July 2007. The 10-year average contribution is 33.3 percent.
High-end sales continue to feel the effects of the credit crunch that struck three years ago, making adjustable-rate mortgages (ARMs) and “jumbo” loans more difficult to obtain.
In August, 9.1 percent of the Bay Area’s home purchase loans were ARMs, down from 9.5 percent in August but up from 4.2 percent a year ago. The Bay Area’s average monthly ARM rate over the last decade is nearly 50 percent. ARMs hit a low of 3.0 percent in January 2009.
Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 33.7 percent of last month’s purchase lending, down from 34.7 percent in August but up from 29.3 percent in September 2009 and a post-housing-boom low of 17.1 percent in January 2009. Before the August 2007 credit crunch, jumbos accounted for nearly 60 percent of the Bay Area purchase loan market.
Last month absentee buyers – mostly investors – purchased 18.8 percent of all Bay Area homes sold, compared with 16.7 percent a year ago and a decade-long average of 13.2 percent. Buyers who appeared to have paid all cash – meaning there was no corresponding purchase loan found in the public record – accounted for 25.5 percent of sales in September, up from 24.0 percent a year ago and a decade-long average of 11.7 percent.
Home flipping has generally trended higher over the past year. In September, 2.4 percent of the homes that sold on the open market had been bought and re-sold within a six-month period. That was up from a Bay Area flipping rate of 2.2 percent in August and up from 2.3 percent a year earlier. Last month’s flipping rates varied from 0.9 percent in Marin County to 2.9 percent in Solano County.
San Diego-based MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. MDA DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. The September Alameda County figures were estimated because of incomplete data for the month.
The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $1,573, down from $1,548 the previous month, and down from $1,578 a year ago. Adjusted for inflation, last month’s payment was 40.9 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 56.3 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 two years. Financing with multiple mortgages is low, down payment sizes are stable, and non-owner occupied buying is above average, MDA DataQuick reported.
This article has been republished from DQNews. You can also view this article at DQNews, a real estate research and news site.