Southern California home sales are down, but San Diego real estate prices remain steady. 
Low San Diego real estate sales are attributable to the weak economy, tigher lending standards, lender loan fraud fears, and the ongoing foreclosures. Foreclosure resales – homes that were foreclosed upon in the past year accounted for 35.1 percent of the resale market in November. Fears of homeowners sueing their lender for faulty foreclosure process or an illegal foreclosure (servicer foreclosing not the actual lender) has kept resales of foreclosed homes slow.
But homeowners still need to sell, due to job relocation, change in economic condition, or if they are too underwater (requiring a short sale). Homes are still selling. With the right agent and the right price, the home can be sold very quickly. Get started today. San Diego real estate market is surviving.
DQNew: Southland Home Sales Dip; Prices Change Little
December 15, 2010
La Jolla, CA—Southern California home sales fell in November to the second-lowest level for that month in 18 years, reflecting the weak economic recovery, a dormant new-home market and tight credit conditions. The median price paid for a home rose above a year earlier for the 12th consecutive month, though November’s gain was the tiniest yet, a real estate information service reported.
A total of 16,208 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 3.2 percent from 16,744 sales in October, and down 15.5 percent from 19,181 in November 2009, according to MDA DataQuick of San Diego.
A drop in sales from October to November is normal for the season, with the decline averaging 8.1 percent since 1988, when DataQuick’s statistics begin. November’s sales were the lowest for that month since 2007, when 13,173 sold, and the second-lowest since 1992, when 15,446 sold. Last month’s sales fell 26.5 percent below the average November sales tally of 22,047.
In the new-home market, sales were the slowest for a November since at least 1988. In many growth areas the math for builders just doesn’t work: The cost to construct is higher than what buyers can afford or are willing to pay. Often builders can’t compete with the pricing of nearby resale homes, especially foreclosures and short sales.
“The great waiting game of 2010 continues. This is the year when the economy sputtered and a lot of potential home buyers opted to sit tight, especially once the government incentives dried up. Fundamentally home sales remain weak because the job market has been slow to mend and credit policies remain unusually tight,” said John Walsh, MDA DataQuick president. “But with sales this low, for this long, you know there are a lot of people just waiting to jump into the market once they feel the time is right. For many the key signal will be a greater sense of job security. For others the cue could be evidence that home prices have bottomed for good, or that ultra-low mortgage rates are slipping away,” he said. The median price paid for a Southland home was $287,000 in November. That was up 1.4 percent from $283,000 in October, and up 0.7 percent from $285,000 in November 2009. The 0.7 percent annual gain was the lowest since the median began rising year-over-year each month since last December.
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. Foreclosure resales – homes foreclosed on in the past year – accounted for 35.1 percent of the resale market last month, up from 34.7 percent in October but down from 39.0 percent a year ago. Foreclosure resales hit a low this year of 32.8 percent in June and, with the exception of a dip in September, have trended slightly higher ever since. The peak was in February 2009 at 56.7 percent, DataQuick reported.
Government-insured FHA loans, a popular low-down-payment choice among first-time buyers, accounted for 36.2 percent of all mortgages used to purchase homes in November, up from 35.8 percent in October but down slightly from 36.5 percent in November 2009. Two years ago FHA loans made up 34.3 percent of the purchase loan market, while three years ago it was just 2.6 percent.
Last month 20.7 percent of all sales were for $500,000 or more, about even with 20.8 percent in October and up from 19.8 percent a year earlier. The low point for $500,000-plus sales was in February last year, when 13.6 percent of sales crossed that threshold. Over the past decade, a monthly average of 26.8 percent 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 35.6 percent of total sales last month. That was up from 34.7 percent in October and 34.1 percent a year ago. Over the last decade, however, those higher-end areas contributed a monthly average of 37.2 percent of regional sales. Their contribution to overall sales hit a low of 26.2 percent 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 5.6 percent of Southland purchase loans, up from 5.4 percent in October and 4.3 percent a year ago. However, over the past decade, a monthly average of 38.2 percent of purchase loans were ARMs. Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 17.8 percent of last month’s purchase lending, the same as in October and up from 15.1 percent 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 percent of the market.
Absentee buyers – mostly investors and some second-home purchasers – bought 23.1 percent of the homes sold in November, paying a median $204,000. Over the last decade, absentee buyers purchased a monthly average of 16.0 percent of all homes, while the peak level was 23.2 percent this February. Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for 28.0 percent of November sales, paying a median $205,000. In February this year, cash sales peaked at 30.1 percent. The 22-year monthly average for Southland homes purchased with cash is 14.3 percent.
The “flipping” of homes has generally trended higher over the past year. Last month the percentage of Southland homes bought and re-sold within a six-month period was 3.6 percent, down from 3.7 percent in October but up from 3.0 percent a year earlier. Last month’s flipping rates varied from as little as 3.4 percent in Orange and Ventura counties to as much as 4.2 percent in San Bernardino 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 $1,136 last month, up from $1,111 in October but down from $1,207 in November 2009. Adjusted for inflation, current payments are 49.3 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 58.5 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 very low, and down payment sizes are stable, MDA DataQuick reported. To get away from it all – go cross country skiing.
