Bay Area Real Estate: Strongest January Sales in 6 Years

Turnaround trends continued apace in the Bay Area housing market last month with the strongest January sales in six years and the tenth straight year-over-year increase in the median sale price, a real estate information service reported.

A total of 5,501 new and resale houses and condos were sold in the nine-county Bay Area last month. That was down 28.4 percent from 7,688 in December, and up 3.2 percent from 5,330 for January a year ago, according to San Diego-based DataQuick.

Sales always drop from December to January. While still below the long-term January average of 6,094, last month’s sales count was the strongest since 6,168 homes were sold in 2007. The strongest January in DataQuick’s records, which go back to 1988, was in 2005 when 8,298 homes sold. The slowest sales were in 2008, when 3,586 sold.

“When we look carefully at underlying trends, it’s obvious that the market is still far from normal. The mortgage market is still dysfunctional. Relative sales rates between categories are lopsided. That said, the market imbalances are moving toward normalcy, with baby steps,” said John Walsh, DataQuick president.

The median price paid for a home in the nine-county Bay Area was $415,000 in January. That was down 6.3 percent from $442,750 in December, and up 27.3 percent from $326,000 in January a year ago.

A drop in the median sale price from December to January is normal for the season. At least half of the year-over-year increase in the January median is the result of changes in market mix, with sales shifting away from low-cost distress homes toward more mid-market and move-up homes.

The median reached a high of $665,000 in June/July 2007 and then fell to a low of $290,000 in March 2009. On a year-over-year basis, the median dropped more than 30 percent each month from August 2008 through May 2009. At the median’s current rate of increase, it will recover about half of its peak-to-trough loss sometime this spring.

The number of homes sold for less than $500,000 last month fell 17.9 percent year-over-year, while the number sold for more than $500,000 increased 45.4 percent, DataQuick reported.
Last month distressed property sales – the combination of foreclosure resales and “short sales” – made up 37.7 percent of the resale market. That was up from 35.3 percent in December and down from 55.6 percent a year ago.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 14.4 percent of resales in January, up from a revised 12.1 percent in December, and down from 27.2 percent a year ago. 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 23.3 percent of Bay Area resales last month. That was up from an estimated 23.2 percent in December and down from 28.1 percent a year earlier.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 38.0 percent of last month’s purchase lending, down from a revised 40.3 percent in December, and up from 23.6 percent a year ago. Jumbo usage dropped to a low of 17.1 percent in January 2009. Before the credit crunch struck in August 2007, jumbos accounted for nearly 60 percent of the Bay Area purchase loan market.

Adjustable-rate mortgages (ARMs), an important indicator of mortgage availability, accounted for 11.4 percent of the Bay Area’s home purchase loans. That was up from 11.1 percent in December, and down from 11.7 percent in January last year. Since 2000, ARMs have accounted for 48.6 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 15.5 percent of all Bay Area purchase mortgages in January, down from 18.9 percent in December and down from 23.6 percent a year earlier. In recent months the FHA level has the been the lowest since summer 2008, reflecting both tougher qualifying standards and the difficulties first-time buyers have competing with investors and other cash buyers.

The most active lenders to Bay Area home buyers last month were Wells Fargo with 13.4 percent of the market, Stearns Lending with 3.9 percent, and RPM Mortgage with 3.6 percent. Bank of America, which had 2.9 percent of the Bay Area market last month, recently announced that it was gearing up for a “new run” at the mortgage market. The bank had around 10 percent of the Bay Area market two years ago.

Last month absentee buyers – mostly investors – purchased 26.7 percent of all Bay Area homes, an all-time high (absentee statistics go back to January 2000). Last month’s absentee level was up from a revised 26.0 percent in December, and up from 25.2 percent a year ago. Absentee buyers paid a median $300,000 in January, up 33.3 percent from $225,000 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 28.5 percent of sales in January. That was down from 29.8 percent in both December and January 2012. The monthly average going back to 1988 is 12.9 percent. Cash buyers paid a median $300,000 in January, up 33.3 percent from $225,000 a year earlier.

San Diego-based 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, San Mateo and San Francisco counties. Statistics for those three counties have been revised for 2011 and 2012.
The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $1,474. That was down from $1,561 in December, and up from $1,233 a year ago. Adjusted for inflation, last month’s payment was 47.4 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 61.1 percent below the current cycle’s peak in July 2007.

Indicators of market distress continue to decline. Foreclosure activity has been trending lower and remains well below peak levels reached several years ago. Financing with multiple mortgages is low, while down payment sizes are stable, DataQuick reported.

All Homes #Sold #Sold Pct. $Median Median Pct.
Jan-12 Jan-13 Chng Jan-12 Jan-13 Chng

Alameda 1,097 1,196 9.0% $295,000 $385,000 30.5%
Contra Costa 1,115 1,165 4.5% $235,000 $301,500 28.3%
Marin 191 181 -5.2% $523,000 $640,000 22.4%
Napa 93 108 16.1% $332,500 $380,000 14.3%
Santa Clara 1,183 1,115 -5.7% $418,000 $550,000 31.6%
San Francisco 308 394 27.9% $602,500 $699,000 16.0%
San Mateo 412 421 2.2% $465,000 $600,500 29.1%
Solano 508 523 3.0% $179,750 $219,000 21.8%
Sonoma 423 398 -5.9% $285,000 $340,000 19.3%
Bay Area 5,330 5,501 3.2% $326,000 $415,000 27.3%