The latest report from DataQuick indicates existing home sales are up in Southern California on the year and for the month of November. New home sales are stuck at record lows, however, dropping 15.2% in the same month. The slight gain in November sales was driven by purchases of homes priced below $400,000, while sales of homes over $500,000 dropped 16% on the year. Low mortgage rates and bargain prices are attracting more buyers, but a struggling economy and difficulty getting home loans is still keeping some buyers on the sidelines. Sales of distressed properties are still a major force in the SoCal market, although the percentage of distressed homes sold dropped slightly for the month. For more on this continue reading the following article from TheStreet.
A total of 16,884 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in November. That was up 0.3 %from 16,829 in October and up 4.2 %from 16,208 in November 2010, according to San Diego-based DataQuick.
While November sales of existing (not new) houses and condos combined rose 5.8% from a year earlier, sales of newly built homes fell 15.2% to the lowest level on record for a November.
"’Tis still the season to go bargain hunting — or at least that’s what the November home sales data suggest. The portion of homes sold to investors continued to hover near an all-time high. Lower prices and amazingly low mortgage rates tempted those with the confidence to buy and the ability to qualify for a loan, or to pay cash," said John Walsh, DataQuick president.
"But these sales levels remain subpar, with new-home sales stuck at record lows. Part of it is the economy and would-be buyers’ uncertainty — about jobs, home prices and a potential surge in foreclosed properties hitting the market. Part of it is the folks who can’t move up because they’re upside down with their mortgages. And many who want to buy more expensive homes struggle with the financing."
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When viewed by price segment, sales trends varied considerably. The number of homes that sold for less than $400,000 last month rose 6.1% from a year earlier, while transactions above $500,000 fell 15.7%. Above $800,000, sales fell 17.6% year-over-year. November sales fell 22.8% from a year earlier in the $600,000-$750,000 range, which in coastal counties was impacted by the recent lowering of conforming loan limits.
Last month the median price paid for all new and resale Southland houses and condos sold was $275,000, up 1.9 %from $270,000 in October but down 4.2% from $287,000 in November 2010.
Last month’s Southland median was 11.3% higher than the median’s low point in the current real estate cycle — $247,000 in April 2009 — but was 45.5% lower than the peak $505,000 median in mid 2007. The peak-to-trough drop was due to a decline in home values and a shift in sales toward lower-cost homes, especially inland foreclosures.
Distressed property sales accounted for 51.3% of the Southland resale market last month, down from 52.3 %in October and down from 53.4% a year earlier. Nearly one out of three homes resold last month was a foreclosure, while roughly one in five was a "short sale."
Credit conditions showed no signs of improvement last month, when the level of both adjustable-rate mortgages, or "ARMs," and larger "jumbo" home loans were at a low point for this year.
Last month ARMs accounted for 6.1% of all Southland home purchase loans, down from 6.9% in October but up from 5.6% a year ago. Last month’s figure was the lowest since November 2010. Over the past 10 years, a monthly average of 37.0% of purchase loans were ARMs. Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 14.6% of last month’s purchase lending. That tied October for the lowest level since January 2010, and was down from 17.9% a year ago. In the current housing cycle, jumbos fell in early 2009 to a low of 9.3% of the purchase market. Before the credit crunch hit in August 2007, jumbos accounted for about 40% of purchase loans.
Beyond the overall credit crunch, lower conforming loan limits that took effect Oct. 1 continued to impact the housing market last month. Lawmakers recently restored the higher limits, which vary by county, for FHA loans but not for mortgages guaranteed by Fannie Mae and Freddie Mac.
In Los Angeles and Orange counties, where the conforming loan limit was lowered from $729,750 to $625,500, the number of homes sold with purchase loans in that range totaled 58 in November, down 44.2% from October and down 84.1% from a year earlier. In October, sales with purchase loans in that range fell 71% from September and 71.5 %from a year earlier.
Absentee buyers, mainly investors and vacation-home buyers, purchased a near-record 24.8% of the Southland homes sold in November, paying a median $200,000.
This article was republished with permission from TheStreet.
