SoCal Housing Market Continues Rebound
December 17, 2009
Southern California’s housing market continued its step-by-step climb up from the January-February bottom as both sales and prices saw gains last month, a real estate information service reported.
A total of 19,181 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 13.3 percent from October’s 22,132, and up 14.7 percent from 16,720 for November 2008, according to MDA DataQuick of San Diego.
Sales almost always decline from October to November. The year-over-year increase was the 17th in a row. In DataQuick’s statistics, which go back to 1988, the average November had 22,312 sales.
Sales of newly built homes saw an unexpected jump last month. A total of 2,039 new homes were sold, the highest of any month so far this year, and 25.5 percent ahead of 1,625 for November 2008.
Sales have been stoked in recent months by several factors: A federal tax credit for first-time buyers, which had been set to expire last month before it was extended and expanded; robust investor activity, especially inland; super-low mortgage rates; the availability of government-insured, low-down-payment mortgages for first-time buyers; and the allure of a potential “deal” on a distressed property.
“This market is still really lopsided. Foreclosures and short sales are huge factors. There’s still not a lot of discretionary buying and selling outside the more affordable markets. Anybody who can sit tight is doing just that. The market won’t fully rebalance itself until financing becomes available for the higher price ranges,” said John Walsh, MDA DataQuick president.
Mortgages above $417,000 – formerly the definition of a jumbo loan – accounted for 15 percent of all home purchase loans, roughly the same as it has been since June. Those loans made up nearly 40 percent of purchases before the August 2007 credit crunch hit. Only 4.1 percent of last month’s home purchase loans were adjustable-rate mortgages. A higher ARM rate is part of a healthy market. From 2000 through 2005, 47 percent of the Southland home purchases were financed with an ARM.
Foreclosure resales – houses and condos sold in November that had been foreclosed on in the prior 12 months – made up 39.1 percent of all Southland resales. That was the lowest since May 2008 when it was also 39.1 percent. It hit a high of 56.7 percent last February.
Government-insured FHA financing continued to play a vital role in the Southland’s housing market. Last month 38.1 percent of all purchase loans were FHA-insured mortgages, the same as in October and up from 34.5 percent a year ago. Two years ago FHA accounted for just 2.5 percent of purchase loans.
Absentee buyers purchased 19.1 percent of all homes sold last month, while buyers who appeared to have paid all cash – meaning there was no corresponding purchase loan – accounted for 24.4 percent of sales, based on an analysis of public records.
The median price paid for a home in Southern California was $285,000 last month. That was up 1.8 percent from $280,000 for the month before, and the same as November 2008. Last month was the first since September 2007 that did not see a year-over-year decline in the median.
Last month’s median was 43.6 percent lower than the peak Southland median of $505,000 reached during several months in early and mid 2007.
Because of a sales mix profile still tilted towards lower-cost foreclosure resales, the median’s fall from its peak overstates the decline in the value of the typical home. Generally, it appears that homes in more costly, established neighborhoods have come down in value by about half as much as homes in many newer, more affordable neighborhoods in inland growth areas.