Southern California May Sales rise as Median Price Edges over $300K
Southern California May Sales rise as Median Price Edges over $300K
Southern California home sales rose in May and the median price paid topped $300,000 for the first time in 20 months, largely because the ultra bargains have been drying up in the low-cost inland areas while sales have increased in the pricier coastal neighborhoods, a real estate information service reported.
The median, or the midpoint of all prices paid for a Southland home, rose to $305,000 in May, up 7.0 percent from $285,000 in April, and up 22.5 percent from $249,000 in May 2009. The May 2009 median was just $2,000 higher than the median's post-housing-boom low of $247,000 in April 2009.
May was the sixth month in a row in which the median rose on a year-over-year basis. However, the May median was still 39.6 percent below the $505,000 peak, reached multiple times in spring and summer 2007. This shift toward more high-end sales helped the Southland median jump $20,000 between this past April and May and $56,000 between this May and May 2009.
The median's steep fall from its mid-2007 peak to its spring 2009 low was the result of two factors: a widespread decline in home values, and a huge run-up in sales of lower-cost inland homes, especially foreclosures, at the same time high-end sales plummeted.
Over the past year, however, that situation has been reversing itself.Lenders have begun to dip their toe into the jumbo loan market although the best mortgage rate in their home loan offerings is still found in loan amounts at or below $417,000.
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"Last month's jump in the regional median sale price is the flipside of what we saw a year ago, when low-cost inland foreclosures dominated and sales in the costlier coastal towns struggled for a pulse. Today the bargains on foreclosures are fewer and farther between, and the high-end is approaching a normal sales rate," said John Walsh, MDA DataQuick president.
"The important thing to remember, though, is that what we saw in May was partly driven by government stimulus," he continued. "In the second half of the year the market will have to stand on its own again, barring new forms of government involvement. Prices will be tested if there's any sudden move by lenders to release a flood of distressed properties."
The combination of tax incentives and low mortgage rates helped stoke sales in mid- to high-end areas, where distress has increased over the last year and sellers have become more motivated and realistic.
Last month 21.6 percent of all sales were for $500,000 or more, compared with 19.3 percent in April and 17.4 percent a year ago. Zip codes in the top one-third of the Southland housing market, based on historical prices, accounted for 30.9 percent of existing single-family house sales last month, up from 28.6 percent in April and 25.3 percent a year ago. Over the past decade, those high-end areas have contributed a monthly average of 34.1 percent of total regional sales. Their contribution to overall sales hit a low of 21.0 percent in January 2009.
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 reports.
Orange County sees Distressed Inventory Climb to Highest Level since May 2009
The inventory of homes in foreclosure and short sales that are on the market in Orange County, Calif., has grown by 29% so far this year, according to National Mortgage News citing Altera Real Estate. In its biweekly report on the Orange County housing market, the company notes, "The active distressed inventory has increased from 2,555 homes at the beginning of the year to 3,307, levels not seen since May of 2009." In Orange County, one of the hardest hit real estate markets in Southern California, the distressed homes inventory represents 31% of the current active inventory. In June of 2009, there were 2,766 distressed homes on the market, 541 fewer than today. The number of foreclosures within the active listing inventory increased by 19 homes in the past two weeks from 559 to 578. But the expected market time for foreclosures is 1.73 months, Altera says, which indicates a hot seller's market.
San Diego Housing Catches its Breath
The run up in home prices over the Spring in San Diego County took a break in June as sales activity, though not inspired, was still more robust than earlier this year. June's median price of $335,500 slid 1.3 percent from the May figure of $340,000, while just a month earlier the median had jumped sharply. But compared to a year ago the June median was up 6.8 percent and represents the ninth straight month of year-over-year increases.
Expect the market, though, to remain relatively sluggish in the coming months as the stimulus from the tax credit starts to fade and economic worries persist. Some experts believe that sales and prices will taper off in the coming months once the more high-volume summer buying season comes to an end and the effect of the federal credit wanes.
MDA DataQuick reports that last month's sales tally of 3,885 homes and condos marked the highest June in four years, although they pointed out that it was still 17 percent below the average activity for that month since the company began tracking the market in 1988.
According to the San Diego Association of Realtors data, single-family resales prices did climb last month, rising nearly 1 percent to $380,000, the highest since July of 2008, when the median-priced home sale was $399,000.
Norm Miller, a University of San Diego economist was quoted as saying "right now, I don't see any reason to see a big surge in sales, just a very slow recovery based on the economic signals we have now. But if you can jump into the single family market now, you can't do any better. Prices are not likely to go down, and interest rates are so low."
"Home values going forward will depend on how lenders handle the remaining distress out there," said DataQuick analyst Andrew LePage. "My sense is if there are not a lot changes in the economy and the level of foreclosures sales doesn't rise, prices will be pretty flat through the end of the year. It looks like we're in a period of stagnation that normally follows a large decline."
May sales were the highest for that month since May 2006, but they still fell 15.0 percent short of the average number sold in May since 1988, when DataQuick's statistics begin. The 9.7 percent increase in sales between April and May compares with an average change of 6 percent since 1988.
Meantime, sales have fallen in many affordable inland communities. In May, zip codes in the bottom one-third of the market, based on their historical prices, saw resales of single-family houses drop 3.9 percent from April and drop 16.2 percent from a year earlier. Part of the decline reflects the dwindling foreclosure inventory, which had been the major draw for first-time buyers and investors. In the upper one-third of the market by price, May resales climbed 10.8 percent from April and rose 21.7 percent from last year.
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