While median home prices in Southern California remained essentially unchanged from March to April, the average home price of $285,000 last month was up 15.4 percent, from $247,000 in April 2009. At the same time, the number of homes sold dipped 1 percent in the same period, indicating that the housing recovery is in a tentative and inconsistent mode. See the following article from DQNews for more on this.
Southern California’s housing market leveled off last month as sales activity migrated ever-so-slightly from inland bargain areas toward entry- and mid-market neighborhoods closer to the coast. The overall median price was unchanged from the month before, but it jumped compared with April 2009’s low point, a real estate information service reported.
Sales of new and resale homes totaled 20,299 in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 0.9 percent from 20,476 in March, and down 1.0 percent from 20,514 for April 2009, according to MDA DataQuick of San Diego.
It’s possible that a significant number of sales that would otherwise have closed escrow in April were delayed until May as buyers tried to take advantage of new state tax credits effective May 1. In addition, those who rushed to sign a sales contract last month before the April 30 deadline for a federal home buyer tax credit would likely close escrow in May or June.
April’s year-over-year changes in sales volume ranged from a decline of 12.3 percent in San Bernardino County to an 11.6 percent increase in Orange County. Condo resales rose 16.9 percent. The Southland’s 1.0 percent decline in overall sales was the first year-over-year drop in almost two years.
“The market’s still taking baby steps on a long road to recovery, trying to find its footing. It’s unclear which of today’s sales characteristics are part of a new reality, and which are still temporary turbulence. The mortgage market, especially for larger home loans, is definitely dysfunctional. Obviously things would be different if the job picture were brighter,” said John Walsh, MDA DataQuick president.
The median price paid for a Southland home was $285,000 last month, the same as in March, and up 15.4 percent from $247,000 for April 2009, which was the low point of the current cycle. The median peaked at $505,000 in mid 2007. The median’s peak-to-trough drop was due to a decline in home values as well as a shift in sales toward low-cost homes, especially foreclosures.
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Similarly, April’s year-over-year gain in the median sale price was partly a reflection of more sales occurring in costlier coastal markets, and fewer in the lower-cost inland areas. A year ago, the two most affordable counties – Riverside and San Bernardino – accounted for 37 percent of total sales, while last month they represented 33.8 percent.
Last month 19.3 percent of all sales were for $500,000 or more, compared with 14.8 percent a year ago. Viewed a different way, zip codes in the top one-third of the Southland housing market, based on historical prices, accounted for 28.6 percent of existing single-family house sales last month, compared with 23.2 percent a year ago. Over the past decade, those high-end areas have contributed a monthly average of 33.4 percent of all sales.
High-end sales would be stronger, and the overall market recovery more robust, if two key forms of financing were easier to obtain: Adjustable-rate (ARMs) and “jumbo” loans. Both have become much more difficult to obtain since the August 2007 credit crisis.
While 44.4 percent of all Southland purchase mortgages since 2000 have been ARMs, it was 5.7 percent last month, up from 4.9 percent in March and up from 1.9 percent in April last year.
Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 16.1 percent of last month’s purchase lending, up from 15.9 percent in March and from 11.1 percent in April 2009. Before the credit crisis, jumbos accounted for 40 percent of the market.
While financing restraints have hampered high-end activity, the more affordable housing markets have seen sales taper off in recent months as the inventory of deeply discounted foreclosures has dwindled.
Foreclosure resales accounted for 36.4 percent of the resale market last month, down from a revised 38.3 percent in March, and down from 53.5 percent a year ago. The all-time high was February 2009 at 56.7 percent.
Government-insured FHA loans, a popular choice among first-time buyers, accounted for 38.5 percent of all mortgages used to purchase homes in April.
Absentee buyers – mostly investors and some second-home purchasers – bought 22.5 percent of the homes sold in April, paying a median $201,000. Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for 27.7 percent of April sales, paying a median $200,000. In March cash sales were a revised 27.9 percent. The 23-year monthly average for Southland homes purchased with cash is 14.0 percent.
The “flipping” of homes has also trended higher over the past year. Last month the percentage of Southland homes flipped – bought and re-sold – within a three-week to six-month period was 3.4 percent, while a year ago it was 1.3 percent. Last month it varied from as little as 2.7 percent in Riverside County to as much as 3.8 percent in Los Angeles County.
MDA DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, 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 $1,238 last month, up from $1,220 for March, and up from $1,038 for April a year ago. Adjusted for inflation, current payments are 44.6 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They were 54.6 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 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.