In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Wednesday, March 13, 2013

DataQuick: February Home Sales in SoCal highest in Six Years, Strong Investor Buying

by Calculated Risk on 3/13/2013 05:37:00 PM

One of the housing markets I follow closely is southern California. I highlighted a couple of key points in this article: 1) Activity is picking up, especially in the move-up markets, 2) there is evidence of strong investor buying, and 3) foreclosure resales are at the lowest level since 2007.

From DataQuick: Southland Home Sales at Six-Year High; Median Price Up Again Yr/Yr

Southern California logged the highest February home sales in six years last month amid relatively strong sales of mid- to high-end properties and a record share of homes sold to absentee buyers. ...

A total of 15,945 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 0.7 percent from 16,058 sales in January, and up 1.0 percent from 15,780 sales in February 2012, according to San Diego-based DataQuick. ... Last month’s sales were the highest for the month of February since 17,680 homes sold in February 2007, but they were 9.9 percent below the February average of 17,696 sales. The low for February sales was 10,777 in 2008, while the high was 26,587 in 2004.

“Our January and February stats certainly indicate housing remains a big target for investors. But typically those two months don't offer much insight into how the market will behave the rest of the year. These are sales that closed in January and February, meaning many of the buyers were out home shopping during the holiday season late last year. That's when many traditional buyers and sellers drop out of the market, leaving a relatively high concentration of very motivated market participants, especially investors,” said John Walsh, DataQuick president.

“March and April will offer a better view of how broader market trends are shaping up this year. One of the real wild cards will be how many more homes go up for sale. More people who've long been thinking of selling will be tempted to list their homes at today's higher prices. Fewer people will be underwater and therefore could at least break even on a sale. Some investors who've held for a while will consider cashing in. A meaningful rise in the supply of homes on the market should at least tame price appreciation.”

Move-up markets continued to show big sales gains from a year earlier. The number of homes sold in February for between $300,000 and $800,000 – a range that would include many first-time move-up buyers – rose 33.4 percent year-over-year. The number that sold for $500,000 or more jumped 54.0 percent from one year earlier, while sales of $800,000-plus homes increased 62.7 percent compared with February 2012.

Last month foreclosure resales – properties foreclosed on in the prior 12 months – accounted for 15.8 percent of the Southland resale market. That was down from a revised 17.2 percent the month before and down from 32.6 percent a year earlier. In recent months foreclosure resales have been at the lowest level since September 2007. In the current cycle, foreclosure resales hit a high of 56.7 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 22.0 percent of Southland resales last month. That was down from an estimated 24.0 percent the month before and 26.9 percent a year earlier.

Investor and cash buying was at or near all-time highs.

Absentee buyers – mostly investors and some second-home purchasers – bought a record 31.4 percent of the Southland homes sold in February. That was up from 30.4 percent the prior month and up from 29.9 percent a year earlier. ... Buyers paying with cash accounted for 35.6 percent of last month's home sales, compared with 33.7 percent both the month before and a year earlier. The peak was 35.8 percent last December.
Emphasis added
Cash buying is strong in many areas. Economist Tom Lawler sent me the following comments and table today. From Tom Lawler:

"While distressed sales, and especially foreclosure sales, have fallen considerably in most markets over the last year, the all-cash share of transactions in aggregate doesn’t appear to have fallen, and in some markets it has even reason. This suggests that investor buying of non-distressed properties has increased significantly over the last year.

(Note: all save for So. California are MLS based; also, the Las Vegas number for February 2013 is an estimate based on press reports that the all-cash share last month was “nearly” 60%. For some reason the GLVAR has stopped posting its press release on monthly sales)"

All Cash Home Sales
Las Vegas59.5%53.2%
So. Cal (DQ)35.6%33.7%
Des Moines21.9%28.8%