December 19, 2009
La Jolla, CA.----The median price paid for a Bay Area home rose above the year-ago level for the second consecutive month, a reflection of widening price stability, fewer foreclosures selling and more activity in pricier areas. Sales dipped below October but were higher than a year earlier for the 15th consecutive month, a real estate information service reported.
The median price paid for all new and resale houses and condos that closed escrow in the nine-county Bay Area last month was $387,000. That was down 0.8 percent from $390,000 in October but up 10.6 percent from $350,000 in November 2008, according to MDA DataQuick of San Diego.
Prior to its 4 percent annual gain in October this year, the median sale price hadn’t risen on a year-over-year basis since November 2007, when it gained 1.5 percent. Last month’s median was 33.4 percent higher than this year’s low point – $290,000 in March – but was still 41.8 percent lower than the $665,000 peak reached in June and July of 2007.
“The latest stats show just how much the Bay Area market has changed in a year,” said John Walsh, MDA DataQuick president. “Financial distress is still a problem with many borrowers, but for now cheap foreclosures have lost their leading role in this housing drama. In the short run, we’ll be comparing the new data to some ridiculously low median sale prices a year earlier – medians severely skewed back then by so many inland foreclosures selling, and so few coastal high-end sales.”
“Statistical quirks aside, the longer-term outlook for home values is far from clear,” he continued. “A lot of people sense lenders are holding back, and that there’s at least one more round of foreclosures lurking around the corner. Combine that with less government stimulus in 2010, and it would threaten whatever price stability we see now.”
A total of 6,878 new and resale houses and condos closed escrow in the nine-county Bay Area last month. That was down 13.3 percent from 7,933 sales in October but up 19.5 percent from 5,756 sales in November 2008. A decline in sales between October and November is normal.
Last month’s sales were the highest for a November since 2006 but were still 14.6 percent lower than the November sales average of 8,050 since 1988, when DataQuick’s stats begin. November sales have ranged from a low of 5,127 in 2007 to a high of 11,906 in 2004. On average since 1988, sales have dropped 8.3 percent between October and November.
Sales in the region’s higher-cost counties – Marin, San Francisco, Santa Clara and San Mateo – represented 42.3 percent of November sales, up from 35.0 percent a year ago, when more sales were concentrated in the lower-cost inland areas steeped in foreclosures. Homes selling for more than $500,000 made up 36.5 percent of all transactions last month, up from 31.3 percent a year ago and a low this year of 22.7 percent in January.
Foreclosure resales – homes sold in November that had been foreclosed on in the prior 12 months – made up 32.5 percent of all resale activity. That was up from 31.3 percent in October but down from 46.8 percent in November 2008. Foreclosure resales peaked at 52 percent of resales in February this year.
The recent decline in foreclosure resales follows a generally downward trend this year in the number of homes being foreclosed on. It’s mainly because lenders and loan servicers have increasingly pursued short sales and loan modifications as an alternative to the costly foreclosure process. The declining inventory of lower-cost foreclosures has been key to stabilizing the housing market, along with the federal government’s efforts to boost housing demand through lower mortgage rates, tax incentives and plentiful, low-down-payment FHA financing.
Federally-insured FHA loans, a popular choice among first-time buyers, made up 26.3 percent of all Bay Area purchase loans last month. That was up from 25.4 percent in October, 19.7 percent a year ago and less than 0.5 percent two years ago.
Meanwhile, the availability of financing for pricier homes has improved modestly in recent months, though such “jumbo” loans remain relatively expensive and difficult to obtain.
Mortgages above $417,000 – formerly the definition of a jumbo loan – made up 29.5 percent of all home purchase loans last month. That was down from 30.9 percent in October but up from 24.0 percent a year ago. More than 60 percent of purchase loans were over $417,000 before the August 2007 credit crunch hit.
Another fuel source for high-end sales – adjustable-rate mortgages (ARMs) – continues to be used far less than what’s normal historically but has trended higher lately. In November, 8.0 percent of Bay Area purchase loans were ARMs, down slightly from 8.3 in October but up from 5.9 percent a year earlier. ARMs fell to a record low of 3.0 percent in January this year. ARMs had averaged 61 percent of the region’s purchase loans this decade up until August 2007.
Last month absentee buyers purchased 15.7 percent of all Bay Area homes sold, while buyers who appeared to have paid all cash – meaning there was no corresponding purchase loan – accounted for 22.4 percent of sales, based on an analysis of public records.
San Diego-based 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. Because of late data availability, sales were estimated in Alameda and San Mateo counties.
The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $1,639 last month, down from $1,665 the previous month, and down from $1,695 a year ago. Adjusted for inflation, current payments are 37.8 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 52.2 percent below the current cycle's peak in July 2007.
Indicators of market distress continue to move in different directions. Foreclosure activity is off its recent peak but remains high by historical standards, with mortgage default notices flattening or trending lower in some areas, but edging higher in others. Financing with multiple mortgages is low, down payment sizes are stable, and non-owner occupied buying is above-average in some markets, MDA DataQuick reported.
Sales Volume Median Price
All homes Nov-08 Nov-09 %Chng Nov-08 Nov-09 %Chng
Alameda 1,182 1,323 11.90% $356,500 $363,000 1.80%
Contra Costa 1,423 1,472 3.40% $265,000 $290,000 9.40%
Marin 155 237 52.90% $625,000 $600,000 -4.00%
Napa 93 104 11.80% $406,500 $380,750 -6.30%
Santa Clara 1,120 1,649 47.20% $450,000 $494,500 9.90%
San Francisco 340 499 46.80% $648,000 $650,000 0.30%
San Mateo 398 525 31.90% $580,500 $587,550 1.20%
Solano 596 621 4.20% $234,500 $220,000 -6.20%
Sonoma 449 448 -0.20% $310,000 $325,050 4.90%
Bay Area 5,756 6,878 19.50% $350,000 $387,000 10.60%
Source: MDA DataQuick Information Systems, www.DQNews.com
