Although home sales remain sluggish, Southern California saw a glimmer of hope in December when sales were up from the previous month in the area. Even though home sales jumped from November, this was the lowest number for that month since 2007, emphasizing the precarious state of the U.S. economy. See the following article from The Street for more on this.
Southland December home sales shot up more than usual from November but fell well short of last year as a sluggish job market, tight credit, and record-low new-home sales undermined the market. At the regional level the median sale price hovered barely above the year-ago mark, while it fell in four individual counties, a real estate information service reported.
Last month 19,528 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. That was up 20.5% from 16,208 in November, but down 12.5% from 22,328 in December 2009, according to MDA DataQuick. The San Diego firm tracks real estate trends nationally via public property records.
A November-to-December sales increase is normal for the season, with the gain averaging 12.9% since 1988, when DataQuick’s statistics begin.
“Ultra-low mortgage rates, coupled with lower prices, gave the market a boost this fall, helping to explain the above-average gain in closings between November and December. We still see the potential for sales to perk up this spring if rates stay low and brighter economic news lifts consumer confidence. Of course, a loosening of credit terms would help an awful lot, too, especially in move-up markets,” said John Walsh, DataQuick president.
“Looking back at 2010, it’s hard to ignore the ongoing slump in the Southland’s new-home market,” he continued. “Last year we saw the lowest sales by builders in two decades – less than half the annual average since 1988. 2009 wasn’t much better. What happens next will hinge largely on the pace of the economic recovery and the manner in which lenders manage their inventories of distressed properties, which are competition for new homes.”
Last month’s total home sales, all new and resale houses and condos combined, were the lowest for that month since December 2007, when 13,240 sold, and the second-lowest since 1995. Last month’s total sales fell 21.6% below the average December sales tally of 24,899.
December new-home sales were the lowest for that month in DataQuick’s records back to 1988. New-home sales for all of 2010 also hit a record low.
The median price paid for a Southland home last month was $290,000, which includes all new and resale houses and condos. That was up 1.0% from $287,000 in November, and up 0.3% from $289,000 in December 2009. However, the 0.3% annual gain was the lowest since the median began rising year-over-year each month since December 2009.
The median’s low point for the current real estate cycle was $247,000 in April 2009, while the high point was $505,000 in mid 2007. The peak-to-trough drop was due to a decline in home values as well as a shift in sales toward low-cost homes, especially inland foreclosures.
At the county level last month, the overall median sale price fell on a year-over-year basis in Los Angeles (-2.7%), Orange (-5.7%), San Bernardino (-1.3%) and Ventura (-1.4%) counties, while San Diego and Riverside counties recorded small gains of 0.9% and 2.0%, respectively.
The median price for the largest home-type category – resale single-family detached houses – fell year-over-year last month in Los Angeles (-1.2%), Orange (-6.0%) and San Diego (-1.4%) counties.
Foreclosure resales – homes foreclosed on in the past year – accounted for 34.3% of the resale market last month, down from 35.2% in November and 39.6% a year ago. Foreclosure resales hit a low this year of 32.8% in June and had generally trended slightly higher until last month. The peak was in February 2009 at 56.7%, DataQuick reported.
Government-insured FHA loans, a popular low-down-payment choice among first-time buyers, accounted for 33.0% of all mortgages used to purchase homes in December, down from 36.2% in November and 35.5% in December 2009. Two years ago FHA loans made up 35.0% of the purchase loan market, while three years ago it was just 2.8%.
Last month 21.1% of all sales were for $500,000 or more, the same as November but up from 20.7% a year earlier. The low point for $500,000-plus sales was in January 2009, when only 13.6% of sales crossed that threshold. Over the past decade, a monthly average of 26.9% of homes sold for $500,000 or more.
Viewed differently, Southland zip codes in the top one-third of the housing market, based on historical prices, accounted for 37.4% of total sales last month. That was up from 35.2% in November and 34.8% a year ago. Over the last decade, those higher-end areas contributed a monthly average of 37.2% of regional sales. Their contribution to overall sales hit a low of 26.2% in January 2009.
High-end sales still suffer from tight credit policies. Adjustable-rate mortgages (ARMs) and so-called jumbo home loans have been relatively difficult to get ever since the credit crunch hit more than three years ago.
Last month ARMs represented 6.4% of Southland purchase loans, up from 5.6% in November and 4.4% a year ago. However, over the past decade, a monthly average of 38.1% of purchase loans were ARMs.
Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 18.0% of last month’s purchase lending, about the same as in November and up from 16.7% a year earlier. But back in 2007, in the months leading up to the credit crisis that began in August that year, jumbos accounted for 40% of the market.
Absentee buyers – mostly investors and some second-home purchasers – bought 22.7% of the homes sold in December, paying a median $215,000. Over the last decade, absentee buyers purchased a monthly average of 16.1% of all homes, while the peak level was 23.2% last February.
Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for 27.2% of December sales, paying a median $212,000. In February last year, cash sales peaked at 30.1%. The 10-year monthly average for Southland homes purchased with cash is 12.7%.
The “flipping” of homes has generally trended higher over the past year. Last month the%age of Southland homes bought and re-sold within a six-month period was 3.5%, the same as in November but up from 3.2% a year earlier. Last month’s flipping rates varied from as little as 2.8% in Ventura County to as much as 3.8% in Los Angeles County.
DataQuick Information Systems 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 $1,205 last month, up from $1,136 in November but down from $1,231 in December 2009. Adjusted for inflation, current payments are 46.4% below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 56.1% 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 two years. Financing with multiple mortgages is very low, and down payment sizes are stable, DataQuick reported.
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