Southern California Home Sales Up, Prices Level Off in June

Southern California Home Sales Up, Prices Level Off in June

Southern California’s housing market’s sales volume rose slowly in June as the median price slipped back slightly from May, but remained 13 percent higher than a year ago. A total of 23,871 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 7.2 percent for May, and up 2.6 percent from June 2009.  The sales count was the highest since July last year. It was the strongest month of June since 2006.

“The market was wildly out of kilter a year ago, now it’s just somewhat out of kilter. We’re still seeing lots of bargain hunting, and we’re not seeing much discretionary buying. Still, more money was spent last month buying homes in Southern California than in the past two years, and more money was loaned. The tax credits had something to do with that, though it’s not clear exactly how much. With the impact of the credits fading fast, the next few months will tell us a lot”, said John Walsh, MDA DataQuick president.

The median price paid for a Southern California home was $300,000 last month. That was down 1.6 percent from $305,000 in May, and up 13.2 percent from $265,000 for June 2009. The low point of the current cycle was $247,000 in April 2009, the high point was $505,000 in mid 2007. The median’s peak-to-trough drop was due to a decline in home values as well as a shift in sales toward low-cost homes, especially foreclosures.

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 two years. Financing with multiple mortgages is low, down payment sizes are stable, and non-owner occupied buying is above- average, MDA DataQuick reported.

In Los Angeles, and especially on the Westside and Santa Monica, the next few months should be good indicators of how the market is trending.

 

June Real Estate Mortgage News

What to say about mortgage rates?  Well, mortgage rates were little changed this week, which is actually a good thing, considering that the homebuyer tax credit expired recently. Starts on one-family homes fell 17 percent to an annualized pace of 468,000 units in May from April’s 20-month high. In addition, permits on one-unit homes fell to the slowest pace since May 2009. But, considering the expected downturn after the expiration of the tax credit, the market is holding stable.

Nonetheless, household balance sheets have been improving over the past four quarters. Basically, households gained $6.3 trillion in net worth in the first quarter from a year ago, according to the Federal Reserve. In addition, homeowners have regained $1.1 trillion in home equity over the same time period.  For homeowners, things are on moving in a positive direction.

Conforming Loan Limits ($417,000 and Under)

Loan Program            Interest Rate            Points

30 Year Fixed                  4.500%                           1.000

10/1 ARM                         4.250%                           1.000

5/1 ARM                           3.500%                           1.000

5/1 ARM I/O                   3.500%                           1.000

Jumbo Loan Limits ($729,751 and Over)

Loan Program            Interest Rate            Points

 

10/1 ARM                         5.250%                           1.000

7/1 ARM                           4.875%                           1.000

5/1 ARM                           4.250%                          1.000

Agency Jumbo Limits ($417,001 – $729,750)

Loan Program            Interest Rates            Point

30 Year Fixed                   4.750%                            1.000

Money Rates

M11                                      M21

10 Yr Bond                           3.18

Prime                                     3.25

6 Month Libor                     0.75188%

 

Economic News Affecting the Housing Market

There was a lot of economic activity that kept investors watching every move.  As the Mortgage and Real Estate News reports:

With a Fed meeting, Treasury auctions, and major economic data on this week’s schedule, investors were watching closely for unfavorable news. In the end, there were no major surprises. Little changed in the Fed statement, auction demand was at average levels, and the economic data was generally close to expectations. The biggest influence on mortgage markets turned out to be turmoil in Greece, which caused investors to seek the relative safety of US bonds, and mortgage rates ended the week a little lower.

Beyond Greece’s economic trouble, investors have been watching to see whether other smaller European countries would slip into economic turmoil.  As a result, investors shifted funds to safer investments, including US Treasuries and mortgage-backed securities (MBS).

In a move that will have direct impact on the housing market, the Mortgage and Real Esta News reports:

Prior to Wednesday’s Fed meeting, it had been reported that support was growing among Fed officials to begin sales of mortgage-backed securities (MBS) from the Fed’s portfolio. The Fed statement made no reference to MBS sales, however. As expected, the Fed made no change in the fed funds rate. The statement described the economy in slightly more positive terms. Also, pending Home Sales, a leading indicator for the housing market, will come out on Tuesday.

While incremental, many of these moves in the economy can prove positive for the real estate market, both in Los Angeles and nationwide.

 

State of California Housing Market

More First-Time Buyers in Real Estate Market

Affordable home prices, tax credits for home buyers, historically low interest rates, and a large number of distressed properties prompted many first-time home buyers to enter the market in 2009, according to C.A.R.’s 2009-2010 “State of the California Housing Market” report released today.

California’s median home price hit bottom in February 2009 at $245,170. Since then, the median home price has increased steadily in month-to-month comparisons, but remained below 2008 levels throughout 2009. The annual median price is projected to increase to $280,000 in 2010 from $271,000 in 2009.

Homes priced $500,000 or less dominated the sales mix throughout 2008 and early 2009, but peaked at 85 percent in January 2009. Meanwhile, the market share of homes sold for more than $500,000 increased from 15 percent in January 2009 to 25 percent in July 2009, holding steady around that figure for the remainder of last year.