---Southern California home sales rose for the 11th consecutive month in May as sales of $500,000-plus homes started to come back. The median price paid increased slightly from the prior month for the first time since July 2007, the result of a shift in market activity where sales of deeply discounted foreclosures waned and mid- to high-end purchases rose, a real estate information service reported.A total of 20,775 new and resale houses and condos closed escrow in San Diego, Orange, Los Angeles, Ventura, Riverside and San Bernardino counties last month. That was up 1.3 percent from 20,514 in April and up 22.8 percent from 16,917 a year ago, according to San Diego-based MDA DataQuick.
Sales have increased year-over-year for 11 consecutive months.
May’s sales were the highest for that month since May 2006, when 30,303 homes sold, but were 21.2 percent below the average May sales total since 1988, when DataQuick’s statistics begin.
Foreclosure resales – homes sold in May that had been foreclosed on in the prior 12 months – accounted for 50.2 percent of all Southland resales. That was down from 53.5 percent in April and from a peak of 56.7 percent in February. May’s figure was the lowest since foreclosure resales were 50.9 percent of all resales last October.
The remarkably sharp declines in the Southland’s median sale price over the past year have been exacerbated by a shift toward an above-average number of sales occurring in lower-cost inland markets rife with discounted foreclosures. However, the number of homes lost to foreclosure declined over the winter, leaving fewer for bargain hunters to scoop up this spring. Meantime, sales have begun to rise a bit in many mid- to high-end markets, which could be due at least in part to sellers dropping their asking prices.
Last month 83 percent of the existing Southland houses sold were purchased for less than $500,000, compared with 84.8 percent in April. Conversely, sales $500,000 and above rose from 15.2 percent of sales in April to 17 percent in May. The last time the $500,000-plus market made up more than 17 percent of all sales was last October, when they were 19.9 percent of sales.
The median price paid for all new and resale houses and condos sold in the six-county Southland last month was $249,000, up 0.8 percent from $247,000 in April but down 32.7 percent from $370,000 a year ago.
The median price hadn’t risen from one month to the next since July 2007, when it increased 0.6 percent from $502,000 to $505,000.
Last month’s median was the second-lowest for any month since it was $242,000 in February 2002, and it stood 50.7 percent below the peak $505,000 median reached in spring and summer of 2007.
“We appear to be in the early stages of the market gradually tilting back toward a more normal balance of sales across the home price spectrum. As more sellers get realistic, more buyers get off the fence and more lenders offer reasonable terms for high-end purchase financing, we’ll see a more normal share of sales in the more established, higher-cost areas that have been nearly comatose,” said John Walsh, MDA DataQuick president.
“Let’s not forget we’re into the traditional home buying season right now,” he continued, “meaning more people are purchasing for all of the normal reasons, such as a new job or to get settled before school starts. Many are concerned with finding the right home in the right area, not just the most deeply discounted home.”
Among the reasons high-end sales have been nearly frozen the past year: The “jumbo” mortgages needed to buy such homes have been more expensive and much harder to obtain since August 2007, when the credit crunch hit. Before then, nearly 40 percent of Southland sales were financed with jumbo loans, then defined as over $417,000. Last month it was only 12.0 percent, though that was up from 10.6 in April and the highest since last November, when $417,000-plus loans were used for 12.2 percent of home purchases.
At the lower end of the price spectrum, first-time buyers continue to rely heavily on government-insured FHA financing. Such loans were used to finance 38.4 percent of all Southland home purchases last month, down slightly from 38.9 percent in April but up from 19.7 percent a year ago. In the Inland Empire, more than half of all May home purchases were financed with FHA loans.
Absentee buyers, including investors who will have their property tax bills sent to a different address, bought 19.4 percent of the Southland homes sold last month. That’s up from 16.9 percent a year ago and 18.6 percent in April. The monthly average since 2000: 15 percent.
MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. MDA 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 that Southern California buyers committed themselves to paying was $1,052 last month, up from $1,038 the previous month, and down from $1,782 a year ago. Adjusted for inflation, current payments are 52.1 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 60.7 percent below the current cycle's peak in July 2007.
Indicators of market distress continue to move in different directions. Foreclosure activity remains near record levels, while financing with adjustable-rate mortgages is near the all-time low, as is financing with multiple mortgages. Down payment sizes and flipping rates are stable. Non-owner occupied buying has risen and is above-average in some markets, MDA DataQuick reported.
