For months the big story was how fast California home sales were rebounding as investors snapped up cheap, foreclosed homes. Now the sales and price trends are reversing.
In August the number of homes sold fell nearly 11% from July. Last month was the 14th in a row with a year-over-year sales increase, however.
The median sale price edged up for the fourth month in a row. The median price was $275,000 in August, up 2.6 percent from July, and down 16.7 percent from $330,000 in August 2008. The month-to-month increase was the fourth in a row after the median fell to a more-than 7-year low of $247,000 in April. The median peaked at $505,000 in mid 2007. “There’s still a lot of uncertainty out there about prices, interest rates and the availability of mortgage money,” says John Walsh, president of real estate research firm MDA DataQuick. “We don’t know if this drop in foreclosure resales is temporary. We’re hearing from public agencies and the banking industry that there’s still a lot of financial distress in the pipeline.”
Foreclosures accounted for 38.8 percent of August’s sales activity, down from 40.7 percent in July. In February this year it peaked at 56.7 percent.
DataQuick reports that homes in older, more costly neighborhoods have come down in value by about half as much as those in newer, more affordable neighborhoods.
Some more stats showing how dramatically the market has changed.
Loans above $417,000 – formerly the definition of a jumbo loan – accounted for nearly 40 percent of all home purchases before the credit crunch hit two years ago. Last month they accounted for 15.6 percent, up from a low of 9.3 percent in January 2009.
Adjustable-rate mortgages, which have accounted for 39.8 percent of all home purchase loans over the last 20 years, accounted for 3.9 percent last month, up from 1.9 percent in April this year.
At the same time, a common form of financing used by first-time home buyers in more affordable neighborhoods remains near record levels. Government-insured, FHA mortgages made up 37.4 percent of all purchase loans in August, up from 37.0 percent in July and 27.1 percent in August last year.