The positive housing reports are really gain steam. First Phoenix, then Las Vegas, now California (both Southern and Northern) is Coming Back Big. There has definitely been a shift, as we are seeing year over year and month over month gains… for many months in a row now. And this Wednesday, in my Live New Foreclosure Investor Webinar I will be discussing these reports, and their impact for you, and how you can turn this news into profits in your bank right now. Foreclosures are at all time highs and lenders are discounting… but it won’t last for long. (More Here.)
Let’s Look at Northern California…
San Francisco Bay Area home sales rose last month to the highest level for a July in four years as deals above $500,000 continued to accelerate. The median sale price climbed above the prior month for the fourth consecutive month, lifted by the combination of more high-end transactions and fewer sales of lower-cost, lender-owned foreclosures.
The median price paid for a home in the nine-county region rose to $395,000, up 12.2 percent from $352,000 in June, but down 16.0 percent from $470,000 in July 2008, according to MDA DataQuick of San Diego. Although last month’s median was 36.2 percent higher than the current cycle’s low of $290,000 in March this year, it was still 40.6 percent below the peak $665,000 median reached in June and July of 2007.
The median’s $43,000 gain between June and July was mainly the result of a shift toward a greater portion of sales occurring in higher-priced neighborhoods. The trend has been fueled this summer by several factors, including: More distress in high-end areas, leading to more motivated sellers; more buyers sensing a bottom could be near; and increased availability of larger home loans, which had become more expensive and far more difficult to obtain after the credit crunch hit two years ago.
Loans above $417,000 accounted for 30 percent of Bay Area home sales last month – the highest since they represented 31.9 percent of sales in August 2008. Before the August 2007 credit crunch, such “jumbo” loans over $417,000 represented more than 60 percent of sales.
Sales of $500,000-plus existing single-family detached houses rose to 35.6 percent of all house resales last month, up from 34.1 percent in June and up from a low this year of 22.7 percent in January. Last month’s $500,000-plus sales were the highest since they were 38 percent of sales last September.
As high-end sales have taken off in recent months, sales of foreclosures in less-expensive inland areas have tapered off. Last month 34.2 percent of the Bay Area homes that resold were foreclosure resales – homes resold in July that had been foreclosed on in the prior 12 months. Last month’s foreclosure resale level was the lowest since it was 33.3 percent in July 2008. Foreclosure resales peaked at 52 percent of all Bay Area resales in February this year.
“In the San Francisco Bay Area and across California we continue to see the market moving gradually back toward a more normal balance of sales across all price ranges. The high end of the market finally has a pulse and that has led to a swift rise in the median sale price. It’s the opposite of what we saw two years ago, when the credit crunch slammed the brakes on jumbo lending and sales of more expensive homes screeched to a halt. That triggered a near free-fall in the median sale price,” said John Walsh, MDA DataQuick president.
A total of 8,771 new and resale houses and condos sold in the nine-county Bay Area last month. That was up 1.5 percent from 8,664 in June and up 15.6 percent from 7,586 in July 2008. Last month’s sales were the highest for the month of July in four years, and the highest for any month since August 2006.
The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $1,739 last month, up from $1,585 the previous month, and down from $2,359 a year ago. Adjusted for inflation, current payments are 33.7 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 51.0 percent below the current cycle’s peak in July 2007.
Now for Southern California…
Southern California homes sold last month at the fastest clip for a July in three years and the fastest pace for any month since December 2006. The median price paid rose slightly from June – marking the third consecutive month-to-month gain – as sales in pricier coastal areas continued to rise and sales of lower-cost foreclosures waned, a real estate information service reported.
A total of 24,104 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 3.6 percent from 23,262 in June and up 18.6 percent from 20,329 a year ago, according to San Diego-based MDA DataQuick.
Sales have increased year-over-year for 13 consecutive months. They’ve been driven higher by increased affordability, low mortgage rates, plentiful government-insured FHA financing for first-time buyers, robust investor demand and, more recently, improved access to the “jumbo” financing used to buy more expensive homes.
Last month the share of Southland purchase loans above $417,000 rose to 15.1 percent, the highest since it was 15.6 percent in August 2008. These “jumbo” mortgages became more expensive and more difficult to obtain after the credit crunch hit in August 2007. Before then, nearly 40 percent of Southland sales were financed with jumbo loans, then defined as over $417,000.
Although sales of lower-cost foreclosures have tapered off, the high end of the housing market has awakened this summer from a long slumber, during which sales had been at or near record lows. Across the Southland, resales of single-family houses priced $500,000 and above rose to 20.1 percent of all existing houses sold in July, compared with a low this year of 15.0 percent in March. However, a year ago 27.2 percent of sales were for more than $500,000.
The recent shift toward more sales of higher-cost homes, in conjunction with the decline in sales of deeply discounted foreclosures, has put upward pressure on the median sale price. The dramatic declines in the median over the past two years were partly the result of the high-end housing market all but shutting down, just as resales of low-cost, inland foreclosures exploded.
The median price paid for all new and resale houses and condos sold in the Southland last month was $268,000, up 1.1 percent from $265,000 in June but down 23.0 percent from $348,000 a year ago. July was the third consecutive month in which the median rose on a month-to-month basis. Last month’s median was the highest since it was $278,000 last December, but it stood 46.9 percent below the peak $505,000 median reached in the spring and summer of 2007.
In the region’s more affordable areas, many first-time buyers continued to choose government-insured FHA financing. Such loans were used to finance 37.2 percent of home purchases last month, up from 36.9 percent in June and 19.7 percent a year ago. Investors and other absentee buyers bought 19.4 percent of the Southland homes sold last month. That’s up from 15.5 percent a year ago and a monthly average since 2000 of about 15 percent. San Bernardino County had the highest share of absentee buyers in July: 27 percent.
The typical monthly mortgage payment that Southern California buyers committed themselves to paying was $1,180 last month, down from $1,193 the previous month, and down from $1,710 a year ago. Adjusted for inflation, current payments are 45.7 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 56.2 percent below the current cycle’s peak in July 2007.
Something these reports have not picked up – the fact that there are thousands of foreclosures NOT on the market, as the banks have been holding them back. These “phantom REO inventory” are being sold to those on the “inside” and at huge discounts. To find out more about how you can find these deals, and make profits in todays market without any of your own cash or credit, you must make my Live New Investor Webinar this Wednesday at 6pm PDT (9pm EST). It’s FREE but you must Register Early as we do Fill Up Quickly. Call 800-310-7730 x2 or more here: http://www.foreclosures.com/pages/TeleConf.asp
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