SF Bay Area posts record 33.1% home price gain; sales drop 9.4%

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DATAQUICK -The median price paid for a Bay Area home rose at its fastest pace on record in June, the result of disappearing distress sales, an improving economy, and mortgage rates that, while up off bottom, remain very low.

The number of transactions fell as a slow-growing supply of homes for sale continued to fall short of demand and purchases by cash and investor buyers eased, a real estate information service reported.

The median price paid for a home in the nine-county SF Bay Area last month was $555,000, the highest since it was $587,500 in December 2007. Last month’s 6.9 percent home price gain from $519,000 in May, and up 33.1 percent from $417,000 in June 2012, according to San Diego-based DataQuick.

The Bay Area median peaked at $665,000 in June and July 2007, then dropped to $290,000 in March 2009. From October 2008 to April 2009 the year-over-year drop for each month exceeded 40 percent.

Much of the median’s ups and downs can be attributed to shifts in the types of homes sold. When adjusting for these shifts, it appears that three fourths of June’s 33.1 percent year-over-year rise reflects an increase in home values, while the rest is the result of a change in market mix.

In a sign of continued market confidence, Bay Area home buyers continue to put near record amounts of their own money into residential real estate.

In June they paid a total of $2.3 billion out of their own pockets in the form of down payments or cash purchases. That was down from May’s all-time high of $2.6 billion, and up from $2.2 billion a year ago.

“It’s easier for a market to regain lost ground than to push into new territory. We’re still bouncing off the bottom. This next part of the cycle should be fairly self-adjusting. As prices go up, more homes will come on the market. Price pressures will ease. The only element we don’t know much about right now is how much pent-up demand there really is out there,” said John Walsh, DataQuick president.

Home price gain beats sales

 
A total of 7,897 new and resale houses and condos were sold in the Bay Area in June. That was down 7.5 percent from 8,541 the month before, and down 9.4 percent from 8,721 for June a year ago.

A May-to-June decline is atypical for the season. Sales usually increase between those two months – by 4.1 percent, on average.

Since 1988, when DataQuick’s statistics begin, June sales have varied from 7,118 in 1993 to 15,735 in 2004. Last month’s sales were 20.9 percent below the June average of 9,993 sales.

The number of homes that sold for less than $500,000 dropped 30.1 percent year-over-year, while the number that sold for more increased 20.1 percent, DataQuick reported.

Last month distressed property sales – the combination of foreclosure resales and “short sales” – made up about 18.0 percent of the resale market. That was down from 19.5 percent in May and down from 40.5 percent a year ago.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 6.0 percent of resales in June, down from a revised 6.5 percent in May, and down from 17.8 percent a year ago. Last month was the lowest since 4.4 percent in August 2007.

Foreclosure resales peaked at 52.0 percent in February 2009. The monthly average for foreclosure resales over the past 17 years is about 10 percent.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 12.1 percent of Bay Area resales last month. That was down from an estimated 13.0 percent in May and down from 22.7 percent a year earlier.

Mortgage money

 
Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 51.8 percent of last month’s purchase lending, up from a revised 49.9 percent in May, and up from 38.4 percent a year ago.

Last month marked the first time that jumbos accounted for more than half of all purchase loans since August 2007, when it was 58.6 percent. Jumbo usage dropped as low as 17.1 percent in January 2009.

Adjustable-rate mortgages (ARMs), an important indicator of mortgage availability, accounted for 17.3 percent of the Bay Area’s home purchase loans in June.

That was up from a revised 14.1 percent in May, and up from 14.2 percent in June last year. Since 2000, ARMs have accounted for 47.9 percent of all purchase loans. ARMs hit a low of 3.0 percent of loans in January 2009.

Government-insured FHA home purchase loans, a popular choice among first-time buyers, accounted for 8.5 percent of all Bay Area home purchase mortgages in June, down from a revised 9.9 percent in May and down from 16.0 percent a year earlier.

In recent months the FHA level has been the lowest since the first half of 2008, reflecting both tougher qualifying standards and the difficulties first-time buyers have competing with investors and other cash buyers.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $2,138. That was the first time it was more than $2,000 since it was $2,056 in September 2008.

Back then the median was $400,000 and a 30-year fixed rate mortgage was 6.04 percent. Adjusted for inflation, last month’s payment was 24.8 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 44.5 percent below the current cycle’s peak in July 2007.

The most active lenders to Bay Area home buyers last month were Wells Fargo with 16.3 percent of the market, RPM Mortgage with 4.3 percent, and Bank of America with 3.9 percent.

Buyers beating home price gain

 
Last month absentee buyers – mostly investors – purchased 23.7 percent of all Bay Area homes. That was down from a revised 25.0 percent in May, and up from 20.4 percent a year ago. Absentee buyers paid a median $405,000 in June, up 42.1 percent from a year earlier.

Buyers who appear to have paid all cash – meaning no sign of a corresponding purchase loan was found in the public record – accounted for 25.6 percent of sales in June. That was down from a revised 27.5 percent the month before and down from 27.3 percent a year earlier.

The monthly average going back to 1988 is 13.1 percent. Cash buyers paid a median $411,500 in June, up 37.6 percent from a year earlier.

San Diego-based DataQuick says, because of late data availability, sales were estimated in Alameda, San Francisco and San Mateo counties for this report.

Source: Record Annual Home Price Gain for Bay Area Median Home Sale Price; Sales Dip Again

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