La Jolla, CA—Home sales in Southern California increased again last month, led by strong foreclosure resale activity in the Inland Empire. The median price paid for a home was unchanged from January and February, indicating that the market may be exploring price floor levels, a real estate information service reported.
A total of 19,486 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 27.9 percent from 15,231 for the prior month, and up 52.1 percent from 12,808 for March 2008, according to MDA DataQuick of San Diego.
An increase from February to March is normal for the season. Last month was the ninth in a row with a year-over-year sales increase. March last year was the slowest March in DataQuick’s statistics, which go back to 1988. The March average is 25,138.
“We’re still waiting for the upper half of the mortgage market to open up. We know that sales of lower-cost housing, especially foreclosure resales in Riverside and San Bernardino counties, are driving today’s market. What we don’t know is how the recession has affected the more expensive neighborhoods,” said John Walsh, MDA DataQuick president.
“Those neighborhoods are dormant right now, but when so-called jumbo financing becomes available, possibly before summer, we expect enough sales to close escrow to generate more meaningful price statistics. Of late the statistics haven’t represented the overall market. Rather, to a large extent they’re simply a reflection of what is selling – mainly distressed properties and homes in the more affordable neighborhoods,” Walsh said.
Jumbo loans of more than $417,000 accounted for just under 40 percent of all home purchases two years ago. Last month they accounted for just 10.0 percent.
At the same time, a common form of financing used by first-time home buyers in more affordable neighborhoods is near record levels. Government- insured, FHA mortgages made up 37.8 percent of all purchase loans in March, up slightly from a revised 37.5% in February and up from 10.1% in March last year.
Regionwide, foreclosure resales accounted for 55.4 percent of March’s resales activity, down from a revised 56.7 percent in February and up from 35.7 percent in March 2008.
The median price paid for a Southland home was $250,000 last month, the same as in January and February. That was down 35.1 percent from $385,000 for March a year ago. The median peaked at $505,000 in mid 2007.
Because of the lopsided sales mix profile, the decline in the median overstates the decline in home values. It appears that homes in older, more costly, neighborhoods have come down in value by about half as much as homes in newer, more affordable, neighborhoods.
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. Because of late data availability, sales for the last two days of March were estimated in Orange County.
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,074 last month, down from $1,090 for February, and down from a revised $1,841 for March a year ago. Adjusted for inflation, current payments were 50.8 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They were 59.7 percent below the current cycle’s peak in July 2007.
Indicators of market distress continue to move in different directions. Foreclosure activity is nearing its 2008 peak, while financing with adjustable-rate mortgages is at an all-time low, as is financing with multiple mortgages. Down payment sizes and flipping rates are stable, and non-owner occupied buying activity is above-average in some markets, MDA DataQuick reported.
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