Southern California home sales surged in July, rising to an eight-year high for that month as buyers found more homes for sale. The median sale price held steady with the prior month but rose nearly 26 percent from a year earlier, marking the seventh consecutive month with a year-over-year gain exceeding 20 percent, a real estate information service reported.
A total of 25,419 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 17.6 percent from 21,608 sales in June, and up 23.5 percent from 20,588 sales in July 2012, according to San Diego-based DataQuick.
Last month’s sales approached a historically normal level. They were 0.5 percent below the average number of sales – 25,541 – in the month of July since 1988, when DataQuick’s statistics begin. Southland sales haven’t been above average for any particular month in more than seven years.
The median price paid for all new and resale houses and condos sold in the six-county region last month was $385,000, the same as in June and up 25.8 percent from $306,000 in July 2012. The June and July medians are the highest for any month since April 2008, when the median was also $385,000.
The median price has risen on a year-over-year basis for 16 consecutive months, with those annual gains ranging between 10.8 percent and 28.3 percent over the past 12 months. July’s median remained 23.8 percent below the peak $505,000 median in spring/summer 2007. The median fell by $256,000 from that peak to its $249,000 trough in April 2009, and it has now regained just over half – 51.8 percent – of that peak-to-trough loss.
In a sign of continued market confidence, Southern California home buyers continue to put near-record amounts of their own money into residential real estate. In July they paid a total of $5.39 billion out of their own pockets in the form of down payments or cash purchases. That was up from $5.25 billion in June and up from $3.61 billion a year ago.
“July home sales came in very strong, and we think a lot of the increase in activity can be chalked up to a rising inventory of homes for sale. The jump in mortgage rates a couple of months back might have spurred more buying, too. The market continues its rebalancing act, with more and more people who’ve been ‘underwater’ now able to sell their homes at a profit, or at least break even. As the mismatch between supply and demand eases, it will be more difficult for home prices to rise as steeply as we’ve seen over the past year,” said John Walsh, DataQuick president.
It appears that the bulk of July’s 25.8 percent year-over-year gain in the Southland median sale price reflects rising home prices, while a small portion – perhaps one-fifth – reflects a change in market mix. (This change consists of a big increase in mid- to high-end sales and a big decline in sales of lower-cost distressed properties.)
In June, the lowest-cost third of the region's housing stock saw a 26.5 percent year-over-year rise in the median price paid per square foot for resale houses. The annual gain was 23.4 percent for the middle third of the market and 18.4 percent for the top, most-expensive third.
Activity in the middle and upper price ranges continued to far outpace sales in the more affordable markets.
Last month the number of homes that sold from $300,000 through $800,000 – a range that would include many move-up buyers – rose 51.7 percent year-over-year. The number that sold for $500,000 or more jumped 73.5 percent from one year earlier, while $800,000-plus sales rose 77.5 percent.
In July, 33.1 percent of all Southland home sales were for $500,000 or more, down a bit from a revised 34.0 percent of sales in June and up from 23.0 percent a year earlier. Last month’s share of over-$500,000 sales was the second-highest – behind June – since February 2008, when 34.2 percent of all sales crossed that price threshold.
The number of Southland homes sold below $200,000 last month dropped 26.4 percent year-over-year, while sales below $300,000 fell 17.6 percent. Low-end sales have been relatively weak largely because of a fussy mortgage market and an inadequate supply of homes for sale. Many owners can’t afford to sell their homes because they still owe more than they are worth, and lenders aren’t foreclosing on as many properties, further limiting supply.
In July foreclosure resales – homes foreclosed on in the prior 12 months – accounted for 7.8 percent of the Southland resale market. That was down from a revised 9.0 percent the month before and down from 20.7 percent a year earlier. Last month’s foreclosure resale rate was the lowest since it was 7.3 percent in June 2007. In the current cycle, foreclosure resales hit a high of 56.7 percent in February 2009.
Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 14.5 percent of Southland resales last month. That was the lowest level since it was 14.1 percent in May 2009. Last month’s short sale figure was down from an estimated 16.1 percent the month before and down from 26.2 percent a year earlier.
Absentee buyers – mostly investors and some second-home purchasers – bought 27.4 percent of the Southland homes sold last month, which is the lowest share for any month this year. Last month’s level was down from 28.6 percent in June and down slightly from 27.5 percent a year earlier. The absentee share has ratcheted down gradually each month this year since hitting a record 32.4 percent in January. The monthly average since 2000, when the absentee data begin, is 18.3 percent. Last month’s absentee buyers paid a median $312,000, up 34.5 percent from a year earlier.
After hitting a peak earlier this year, the share of homes flipped has generally trended a bit lower, but rose modestly in July. Last month 6.0 percent of all Southland homes sold on the open market had previously sold in the prior six months. That’s up from a flipping rate of 5.6 percent in June and up from 4.5 percent a year ago. (The figures exclude homes resold after being purchased at public foreclosure auction sales on the courthouse steps).
Buyers paying with cash accounted for 29.4 percent of last month's home sales, down from 30.5 percent the month before and down from 31.8 percent a year earlier. The cash share of purchases has declined each month since hitting an all-time peak of 36.9 percent this February. Since 1988 the monthly average for cash buyers is 16.2 percent of all sales. Cash buyers paid a median $328,000 last month, up 39.6 percent from a year ago.
Credit conditions again showed signs of easing a bit.
Last month 10.9 percent of Southland home purchase loans were adjustable-rate mortgages (ARMs) – the highest for any month since ARMs were 12.6 percent of the market in July 2008. Last month’s ARM level was up from 9.6 percent the prior month and 6.2 percent a year earlier. Since 2000, a monthly average of about 32 percent of Southland purchase loans have been ARMs.
Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 28.3 percent of last month’s Southland purchase lending – the second-highest, behind June, since August 2007, when jumbos were 36.7 percent of the market. Last month’s figure was down insignificantly from 28.6 percent the prior month and up from 20.2 percent a year earlier. In the months leading up to the credit crunch that struck in August 2007, jumbos accounted for around 40 percent of the home loan market
All lenders combined provided $7.11 billion in mortgage money to Southern California home buyers in July, the highest amount since $7.95 billion in August 2007.
Government-insured FHA loans, a popular low-down-payment choice among first-time buyers, accounted for 18.5 percent of all purchase mortgages last month. That was down from 19.5 percent the month before and 27.9 percent a year earlier. In recent months the FHA share has been the lowest since spring 2008. The decline reflects tighter FHA qualifying standards implemented in recent years as well as the difficulties first-time buyers are having competing with investors and cash buyers.
DataQuick 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 Southland buyers committed themselves to paying last month was $1,537, up from $1,483 the month before and up from $1,106 a year earlier. Adjusted for inflation, last month’s typical payment was 35.9 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 47.5 percent below the current cycle’s peak in July 2007.
Indicators of market distress continue to decline. Foreclosure activity remains well below year-ago and far below peak levels. Financing with multiple mortgages is very low, and down payment sizes are stable, DataQuick reported.
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