The Southern California housing market posted the highest number of February home sales in five years as record levels of investor and cash buyers helped spur robust activity under $300,000. The median price paid for homes across the six-county region inched up from January but dropped below the year-earlier level for the 12th consecutive month, according to San Diego-based DataQuick. A total of 15,573 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 7.2 percent from 14,523 in January, and up 8.4 percent from 14,369 in February 2011.
The increase in sales between January and February was larger than usual. On average, sales have risen 1.1 percent between those two months since 1988, when DataQuick’s statistics begin. Southland sales have increased year-over-year for two consecutive months and for six out of the last seven months. However, last month’s sales tally was 12.3 percent below the average for all the months of February since 1988.
Sales did not rise across the price spectrum last month. Transactions below $300,000 rose 9.5 percent from a year earlier, while the number of $300,000-$800,000 deals dipped 0.8 percent year-over-year and sales above $800,000 fell 12.6 percent.
“February sales got a big boost from investors and others paying cash for relatively affordable homes, as well as from an extra day’s worth of sales thanks to the leap year,” said John Walsh, DataQuick president. “Without the latter, sales might have been up a bit, but not to a five-year high. It’s just one more reason for us to remind everyone that January and February usually aren’t good months to use for forecasting purposes. The big picture remains one where the bottom of the housing market continues to see much of the action, while move-up activity remains sluggish. Financing is still difficult for many and lots of potential move-up buyers and sellers are stuck because they owe more than their homes are worth.”
The median price paid for a Southland home last month was $264,750, up 1.8 percent from $260,000 in January but down 3.7 percent from $275,000 in February 2011.
Last month’s median was 7.2 percent above the low point for the current real estate cycle–$247,000 in April 2009–and 47.6 percent below the $505,000 peak in mid-2007. The peak-to-trough drop was due to a decline in home values as well as a shift in sales toward lower-cost homes, especially inland foreclosures.
Distressed sales continued to make up more than half of the re-sale market.
Foreclosure re-sales, defined as properties foreclosed on in the prior 12 months, accounted for 32.5 percent of the resale market last month, down from a revised 32.6 percent in January and down from 37 percent a year earlier. Foreclosure re-sales hit a high for the current cycle of 56.7 percent in February 2009 and a low of 31.6 percent last November.
Short sales made up an estimated 20.5 percent of Southland re-sales last month. That compares with 21.1 percent in January, which was a high point for the current real estate cycle, and 19.7 percent in February 2011. Credit conditions remained tight.
Adjustable-rate mortgages (ARMs) accounted for 5.7 percent of last month’s Southland home purchase loans, down from six percent in January and 7.7 percent a year ago. Since 2000, a monthly average of about 37 percent of purchase loans were ARMs.
Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 14.4 percent of last month’s purchase lending, down from 15.2 percent in January and down from 15.6 percent a year earlier. In the months leading up to the credit crisis that struck in August 2007, jumbos accounted for 40 percent of the market.
Absentee buyers, mostly investors and some second-home purchasers, bought a record 29.7 percent of the Southland homes sold in February, up from a revised 28.0 percent in January and 26.4 percent a year earlier. Last month’s absentee buyers paid a median $192,750, down from $195,000 in February and $202,000 a year earlier. The Inland Empire saw absentee purchases rise to a record 37.2 percent of all sales. Since 2000, the Southland’s absentee buyers have purchased a monthly average of 17.0 percent of all homes sold.
Cash purchasers accounted for a record 32.8 percent of February home sales, up from 32.2 percent in January and up from 32.3 percent a year earlier. Cash buyers paid a median $200,000 last month, the same as in January and down from $205,000 a year earlier. Since 2000, the monthly average for Southland homes purchased with cash is 15.2 percent. Cash purchases are where there was no indication in the public record that a corresponding purchase loan was recorded.
Government-insured Federal Housing Administration (FHA) loans, a popular low-downpayment choice among first-time buyers, accounted for 31.2 percent of all purchase mortgages in February. Last month’s FHA level was up from 31.1 percent in January and down from 32.2 percent a year earlier. Two years ago FHA loans made up 36.8 percent of the purchase loan market, while three years ago it was 36.9 percent.
Last month, 16.5 percent of all sales were for $500,000 or more, up a hair from a revised 16.4 percent in January but down from 18.7 percent a year earlier. The low point for $500,000-plus sales was in January 2009, when only 13.8 percent of sales were above that threshold. Over the past decade, a monthly average of 28.1 percent of homes sold for $500,000 or more.
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $998 last month, compared with $983 in January, which when adjusted for inflation was the lowest in DataQuick’s records back to 1988. Last month’s figure was down from $1,174 for the same month last year. Adjusted for inflation, current payments are 56.9 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 64.7 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 few years. Financing with multiple mortgages is very low, and downpayment sizes are stable, DataQuick reported.