Tuesday, December 15, 2009

DataQuick: SoCal Home Sales Increase in November

by Bill McBride on 12/15/2009 02:36:00 PM

This is no surprise - existing home sales will be through the roof nationwide in November as buyers rushed to beat the initial deadline for the homebuyer tax credit. Also ignore the median price - it is skewed by the mix of properties sold.

A few key points:

  • A large portion of market activity is from first time homebuyers using FHA loans and investors. This is not a healthy market.

  • The percentage of foreclosure resales has decline to 39.1 percent - still very high historically.

  • The number of NODs (Notice of Default) has "flattened out or trended lower in many areas". This could be a positive, although I think the foreclosure activity is moving up the price chain - and these NODs are for more expensive properties.

    From DataQuick: Southland home sales and prices up
    A total of 19,181 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 13.3 percent from October’s 22,132, and up 14.7 percent from 16,720 for November 2008, according to MDA DataQuick of San Diego.

    Sales almost always decline from October to November. The year-over-year increase was the 17th in a row. In DataQuick’s statistics, which go back to 1988, the average November had 22,312 sales. ...

    Sales have been stoked in recent months by several factors: A federal tax credit for first-time buyers, which had been set to expire last month before it was extended and expanded; robust investor activity, especially inland; super-low mortgage rates; the availability of government-insured, low-down-payment mortgages for first-time buyers; and the allure of a potential “deal” on a distressed property.

    “This market is still really lopsided. Foreclosures and short sales are huge factors. There’s still not a lot of discretionary buying and selling outside the more affordable markets....” said John Walsh, MDA DataQuick president.
    ...
    Foreclosure resales – houses and condos sold in November that had been foreclosed on in the prior 12 months – made up 39.1 percent of all Southland resales. That was the lowest since May 2008 when it was also 39.1 percent. It hit a high of 56.7 percent last February.

    ... Last month 38.1 percent of all purchase loans were FHA-insured mortgages, the same as in October and up from 34.5 percent a year ago. Two years ago FHA accounted for just 2.5 percent of purchase loans.

    Absentee buyers purchased 19.1 percent of all homes sold last month ...

    Foreclosure activity remains high by historical standards, although mortgage default notices have flattened out or trended lower in many areas.