Southland August Home Sales Climb

Median Sale Price of SoCal Homes
Median Sale Price of SoCal Homes

Source: Dataquick: 9/14/2011

Southern California home sales rose last month above the July and year-earlier level, the result of seasonal forces, a relatively high number of business days this August and continued robust bottom-feeding. Prices appeared to be trending sideways to downward, with the region’s overall median sale price dipping below a year earlier for the sixth consecutive month.

Sales Volume is Up

A total of 19,654 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in August. That was up 8.6 percent from 18,090 in July and up 6.0 percent from 18,541 in August 2010.   Orange County sales increased 9.5% in August 2011 year over year.  The median price dropped 4.5% to $420,000.   On average, sales between July and August have risen 3.4 percent since 1988, when DataQuick’s statistics begin. August sales have varied from a low of 16,379 in 1992 to a high of 39,562 in 2003. Last month’s sales count was 26.6 percent below the August average of 26,761 sales since 1988.   August was the first month since June 2010 to post a year-over-year gain in home sales. Last month was also the first since November 2009 in which all six Southland counties logged higher sales than a year earlier.

The Median Price was lower

The median price paid for all new and resale Southland houses and condos purchased last month was $279,000. That was down 1.4 percent from $283,000 in July and down 3.1 percent from $288,000 in August 2010. Last month’s median was the lowest since February, when it was $275,000.   Last month’s median was 13.0 percent higher than the median’s low point in the current real estate cycle – $247,000 in April 2009 – but was 44.8 percent 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.

New Home Sales at low levels

The region’s overall median sale price is suppressed somewhat by abnormally low sales of newly built homes, which typically sell for more than resale homes. Southland builders sold 1,184 new houses and condos last month, down 14.3 percent from a year earlier and the lowest new-home tally for an August in DataQuick’s records back to 1988.   Compared with a year earlier, total August home sales fell in the upper price ranges but rose 10.2 percent in the below-$300,000 segment.

Mortgage Rates are near lifetime lows

The current 30-Year Fixed Rate mortgage is at or near lifetime lows reported at just 4.03% today by BankRate.com.  Tight credit continues to hamper sales in mid- to high-end markets that had long relied on adjustable-rate and “jumbo” home loans. Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 17.3 percent of last month’s purchase lending, down from 17.8 percent in July and 18.1 percent a year earlier. In the current cycle, jumbos fell in early 2009 to less than 10 percent of the purchase market. In the months leading up to the credit crunch that struck in August 2007, jumbos accounted for 40 percent of the Southland market.

In lower-cost neighborhoods, many buyers – especially investors – continue to buy homes without a loan.  Southland buyers paying cash accounted for 28.5 percent of total August home sales, paying a median $210,000. Last month’s cash buyer level was down slightly from 28.7 percent in July but up from 14.1 percent a year earlier. Cash purchases hit a high of 32.3 percent of sales this February, while the 10-year monthly average is 14.1 percent. Cash purchases are where there was no indication in the public record that a corresponding purchase loan was recorded.   Last month 53.5 percent of those paying cash were absentee buyers, meaning they were investors or second-home buyers.

Payment Prices are Way Down from previous peak payments

The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,101 last month, down 4.6 percent from $1,154 in July and down 4.9 percent from $1,158 in August 2010. Adjusted for inflation, current payments are 52.5 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 61.1 percent below the current cycle’s peak in July 2007.

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