Thursday, May 21, 2009

California Bay Area Home Sales: "Robust" and "Anemic"

by Calculated Risk on 5/21/2009 02:12:00 PM

The tale of two cities continues ...

From DataQuick: Bay Area home sales rise again; median price up slightly over March

Bay Area home sales posted a year-over-year gain for the eighth consecutive month in April, with robust sales in lower-cost inland areas once again compensating for anemic sales on the coast. ...

A total of 7,139 new and resale houses and condos closed escrow in the nine-county Bay Area last month. That was up 12.9 percent from 6,325 in March and up 13.1 percent from 6,310 in April 2008, according to MDA DataQuick of San Diego.

Last month’s sales were the second-lowest for an April since 1995 and were 23.2 percent below the average April sales total back to 1988, when DataQuick’s statistics begin.

Foreclosure resales – homes sold in April that had been foreclosed on in the prior 12 months – accounted for 47.4 percent of Bay Area resales. That was down from 50.2 percent in March and 52.0 percent in February. Last month’s figure was the lowest since foreclosure resales were 46.8 percent of existing home sales last November.

A lower concentration of discounted foreclosure resales in the statistics is one reason the median sale price has recently begun to more or less flatten, or at least erode more slowly, in many markets.
...
Home sales in many high-end areas, especially on the coast, remain at record or near-record-low levels.

In lower-cost communities, first-time buyers have turned to government-insured FHA mortgages, which represented a record 26 percent of all Bay Area home purchase loans in April, up from 3.2 percent a year ago. The combination of FHA financing, steep home price declines and low mortgage rates have fueled record or near-record-high sales this spring in many of the Bay Area’s most affordable, foreclosure-heavy communities.
...
Foreclosure activity remains at historically high levels ...
emphasis added
Key points (worth repeating):

  • Ignore median price. The mix changes the median price too much.

  • Sales at the low end are "robust". Record or near record sales in the "affordable, foreclosure-heavy" communities.

  • Sales at the high end are "anemic". Record or near-record-low sales in the high end areas. Note: This will change once prices start to fall (See House Price Puzzle: Mid-to-High End)

  • Foreclosures are still at "historically high" levels - and will probably hit records again now that the moratorium is over. Foreclosure resales accounted for 47.4 percent of all resales last month. Remember the Distressing Gap!