Southern California Home Sales Slightly Up in September

LA JOLLA, Calif. (DQNews) -- Southern California home sales dropped last month from August, as they normally do, and eked out a tiny gain from a year earlier as bargain hunting below $300,000 remained relatively strong.

Home prices continued their sideways-to-downward slide, with the region's median sale price falling below the year-ago level for the seventh consecutive month, a real estate information service reported.

A total of 18,149 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in September. That was down 7.7 percent from 19,654 in August and up 0.3 percent from 18,091 in September 2010, according to San Diego-based DataQuick.

It's normal for home sales to drop between August and September, partly because many home buyers try to close their deals before school starts in late summer. On average, sales have fallen 8.3 percent between August and September since 1988, when DataQuick's statistics began.

September sales have varied from a low of 12,455 in 2007 to a high of 37,771 in 2003. Last month's sales were 25.3 percent below the September average of 24,310 transactions since 1988.

"Last month's Southland sales weren't great but, like some other economic indicators of late, they came in a bit higher than some might have expected. Holding steady with a year ago isn't so bad when you consider the hits the housing market has taken in recent months, including a big psychological blow from a tanking stock market in early August. Part of what's keeping demand afloat is improved affordability thanks to ultra-low mortgage rates and lower home prices. We'll have to wait and see what impact the lower conforming loan limits, which took effect recently, will have in some of the higher-priced markets," said John Walsh, DataQuick president.

The median price paid for all new and resale Southland houses and condos purchased last month was $280,000. That was up 0.4 percent from $279,000 in August but down 5.2 percent from $295,500 in September 2010.

The regional median has declined year-over-year for the past seven months. The last time any one of the six Southland counties posted an annual gain in its median sale price was in January, when San Bernardino logged a 1.0 percent year-over-year increase.

Last month's median was 13.4 percent higher than the median's low point in the current real estate cycle - $247,000 in April 2009 - but was 44.6 percent lower than the peak $505,000 median in mid 2007. The peak-to-trough drop was due to a decline in home values and a shift in sales toward lower-cost homes, especially inland foreclosures.

Today's median price is also undermined by the Southland's extraordinarily weak new-home market. Sales of newly built homes, which typically sell for more than resale homes, totaled 1,056 last month, down 24.9 percent from a year ago and the lowest for the month of September in DataQuick's records back to 1988.

The focus for many buyers continues to be on the region's most affordable resale homes, often located in areas hit hardest by distressed property sales and price declines. Compared with a year earlier, September home sales fell in the middle and upper price ranges but rose 5.6 percent in the below-$300,000 market. Sales of homes priced $300,000 to $600,000 fell 9.3 percent year-over-year, while sales over $800,000 fell 10.4 percent from September 2010.

Many of the sub-$300,000 deals were distressed properties, which accounted for more than half of the Southland resale market last month. Nearly one out of three homes resold last month was a foreclosure, while close to one in five was a "short sale."

Tight credit conditions didn't let up last month, meaning demand continues to be constrained in mid- to high-end markets that had long relied on adjustable-rate and "jumbo" home loans.

Meanwhile, many buyers continue to skip a home loan and use cash.

Southland buyers paying cash accounted for 28.5 percent of total September home sales, paying a median $210,000. Last month's cash buyer level was down slightly from 29.1 percent in August but up from 26.2 percent a year earlier. Cash purchases hit a high of 32.3 percent of sales this February, while the 10-year monthly average is about 14 percent. Cash purchases are where there was no indication in the public record that a corresponding purchase loan was recorded.

Last month 52.9 percent of those paying cash were absentee buyers, meaning they were investors or second-home buyers.
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