A bounce in April sales in SoCal; weakness in L.A.

Breaking News: DataQuick reports a big bounce in April home sales in Southern California, with sales surging 21.9% from March levels to the highest level of sales since last August. DataQuick attributed the increase to "more sales of homes under $500,000 in inland areas where depreciation and foreclosures have been greatest."

Los Angeles County reported the weakest sales numbers for the Southern California region, showing a 30.6% decline from year-ago levels and a $5,000 drop in median prices paid.

Peter Hong's L.A. Times coverage is here; the entire DataQuick release is below. Highlights:
  -- Despite the increase from March to April, the April sales total was 19% below year-ago levels and reflects the weakest April sales total in 13 years.
  -- "Post-foreclosure homes continued to play a major role in the Southland market," DataQuick said, making up 37.5% of the market in April, up from 35.8% in March.
   -- Median price paid across Southern California was $385,000 in April, unchanged from March, and down 23.8% from the peak median of $505,000 in April 2007.
  -- In Los Angeles County: Sales were down 30.6% from year-ago levels, and median prices dropped by $5,000, from $440,000 to $435,000.

Photo Credit: AP
Click below to read the entire DataQuick news release.

La Jolla, CA -- Southern California home sales surged last month to the
highest level since August as bargain shoppers took advantage of price
slashing. Although some higher-end costal markets also posted gains, the
swell in transactions mainly reflects more sales of homes under $500,000 in
inland areas where depreciation and foreclosures have been greatest, a real
estate information service reported.
     A total of 15,615 new and resale houses and condos sold in Los Angeles,
Riverside, San Diego, Ventura, San Bernardino and Orange counties in April.
That was up 21.9 percent from 12,808 the previous month but down 19 percent
from 19,269 in April last year, according to DataQuick Information Systems.
      Sales from March to April have risen on average 1.2 percent since 1988,
when DataQuick's statistics begin. Although last month's sales total was the
highest for any month since August 2007, when 17,755 homes sold, it was still
the weakest April since April 1995, when 15,303 homes sold, and the second-
lowest April on record. Last month was 38 percent below of the April average
of 25,311 sales.
      Post-foreclosure homes continued to play a major role in the Southland
market. Of all the homes that resold in April, 37.5 percent had been
foreclosed on at some point in the prior 12 months, compared with a revised
35.8 percent in March and 4.6 percent a year ago. Across the six-county area,
"foreclosure resales" ranged from 26.9 percent of resale activity in Orange
County to 52.7 percent in Riverside County.
      Last month's upswing in sales was most pronounced for homes priced
under $500,000, which accounted for two-thirds of the Southland's sales gain
over March. Riverside County, the epicenter of Southland foreclosure activity
and price declines, posted the region's only year-over-year sales increase -–
that county's first in two years.
      ZIP Codes showing relatively large annual gains in sales of existing
houses included those in San Jacinto and Lake Elsinore in Riverside County,
Victorville in San Bernardino County, Lake Forest and Anaheim in Orange
County, Lancaster in Los Angeles County and Chula Vista in San Diego County.
     "Quite a few more buyers stepped off the sidelines last month to snap up
homes at substantial discounts relative to the market's short-lived peak,"
said Marshall Prentice, DataQuick president. "It's no surprise, given the
magnitude of the price declines in inland areas and the fact sales have been
so amazingly low for so long. We continue to look for evidence of a sales
bounce in the mid-priced and higher-end markets along the coast. If the
higher conforming loan limits are making a difference in those areas, it's
certainly not a large one, at least not as of the end of April."
     The median price paid for a Southland home was $385,000 last month,
unchanged from March but down 23.8 percent from the peak median of $505,000
in April 2007. That peak was reached several times last spring and summer.
Last month was the first in eight months that the median did not decline on a
month-to-month basis.
     The median has plunged for two reasons: depreciation, especially in
inland markets, and the sharp dropoff in the past eight months of home sales
financed with so-called jumbo mortgages, which until recently were defined as
loans above $417,000.
     Before the credit crunch hit in August 2007, nearly 40 percent of
Southland sales were financed with jumbo loans. Last month jumbos accounted
for 15.1 percent of Southland sales –- about the same as in March.
     DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and
Associates, monitors real estate activity nationwide and provides information
to consumers, educational institutions, public agencies, lending
institutions, title companies and industry analysts.
     The typical monthly mortgage payment that Southland buyers committed
themselves to paying was $1,716 last month, down from a $1,816 the previous
month, and down from $2,356 a year ago. Adjusted for inflation, the current
payment is 18.3 percent lower than the spring of 1989, the peak of the prior
real estate cycle. It is 33.1 percent below the current cycle's peak in June
2006.
     Indicators of market distress continue to move in different directions.
Foreclosure activity is at record levels, financing with adjustable-rate
mortgages is at a six-year low. Down payment sizes and flipping rates are
stable, non-owner occupied buying activity is increasing, DataQuick reported.

(chart)

All homes        Apr-07   Apr-08    %Chng     Apr-07     Apr-08    %Chng

Los Angeles       7,225    5,016   -30.6%    $540,000   $435,000   -19.4%
Orange            2,682    2,166   -19.2%    $629,000   $500,000   -20.5%
Riverside         2,987    3,186     6.7%    $409,000   $295,000   -27.9%
San Bernardino    2,049    1,667   -18.6%    $370,000   $265,000   -28.4%
San Diego         3,436    2,809   -18.2%    $490,000   $400,000   -18.4%
Ventura             890      771   -13.4%    $572,000   $445,000   -22.2%
SoCal            19,269   15,615   -19.0%    $505,000   $385,000   -23.8%

Source: DataQuick Information Systems, DQNews.com

Comments

[Laker]

Where is the surprise?
Many IE areas are now selling for 2001 prices...That is pretty much the value of those places in the long term. No surprise here.
In LA we are still down as houses are selling in 2004 prices...When LA prices drop to 2001 levels, the sales will be steaming, and inventory will decrease dramatically to traditional number.
We're sure not there yet...

[sfvrealestate]

I don't question Dataquick's research, BUT: couldn't it also be that lending standards have loosened up for the first time since August? I'll be posting later today on my own blog about the good turnout I had at an open house that I held yesterday.

[the bitter renter]

$435k? Getting through the $450k barrier seems to have accelerated the price drop in L.A., even if the overall Southland median home price has stabilized for a month.

"We continue to look for evidence of a sales
bounce in the mid-priced and higher-end markets along the coast."

Keep looking. The mid-priced buyer is waiting to see how far things fall first.

[puckhead]

I agree with sfvrealestate about banks slowly getting back into the lending game. If you have good credit and equity in your house, it’s a great time to refinance. I refinanced a few months ago and the rate I got was much lower than the published rate. If the banks can find a good customer, they’ll bend over backwards to cut a deal.

[tealeaf]

Who will do the year-ago lookback research on shockg's comments on Lansner's OCReg blog from last year?

Shock: come clean. Did you expect a 19% drop in one year on the median? Or a 31% drop in volumes?

SFVRE: look forward to reading about your open house, and activity as it relates to price points.

[sandiegan]

San Diego up 1.25% Month-over-Month!

Start the party again!

Or not...we'll see in the next couple of months.

If we get M-O-M increases for May and June, then I'd say we've hit bottom.

[Raul Garcia]

LOL, they all over paid at least a $100,000.

There is a sucker born every minute.

[shockg]

All the speculators looking to time the market (Laker, E, tealeaf, etc) will only see the recovery through their rear view mirror long after the bottom has passed.

[MyLessThanPrimeBeef]

They have a name for those April buyers - rear-view mirror buyers with a case of out-of-control pre-mature jubilation.

"Look, mom, it's down 25% from back then."

Sadly, mom should have installed a telescope becuase if you look further back, it's still too expensive.

[Robert in Palm Springs]

This will give pundits the opportunity to announce the end of the housing crisis. They are already saying the recession is over and the financial crisis is over, so why not housing based on any good news? Buy houses! Buy stocks! Quick before prices go through the roof again!

This, of course, is exactly what they WANT you to do. Put your money at risk so they can take theirs off the table.

The fact that foreclosures are finally selling in this market in significant numbers can only help the sales volume, which compared to year over year are still declining. There are probably some good deals out there so congratulations to those who make out well on a buy.

However, there is historical precedence (see 1920s -1930s) to indicate the housing crisis will continue to worsen for years to come. The economy will as well. Besides, things are way worse now than what our government tells us. They use data they know is flawed because it serves them well (i.e. inflation data and employment data).

The financial crisis is not over. We know this because of the ACTIONS of the Fed, commercial banks and Wall Street. The Fed is trying (at last) to help the dollar and likely will not lower interest rates for a while. They can’t because the European Central Bank won’t lower their rates. But, the Fed can’t raise them either because the economy is too fragile.

Commercial banks like WaMu are pulling back on HELOCs because they are losing their shirts on them with more losses to come. The credit pool is receding.

Wall Street is laying off thousands of people with little publicity because this is a sure sign business is contracting. If we were in recovery mode, they would be hiring. Always has been, always will be. Despite this, they are TELLING everyone to buy stocks and other dubious products in their own self-serving way. Don’t listen to them; watch what they do!

For the past week or so, Wall Street has manufactured a rally based on suspect positive data, denial of bad economic data and clear manipulation of the markets on light volume. This will not last. Consumers are close to broke, too many jobs have been lost, too little real liquidity is left, and the fundamental imbalances remain uncorrected. In essence, nothing has been done to solve the causes of all these problems, only quick fixes to bandage over the obvious wounds and to keep the illusion of prosperity alive.

It is way too dangerous to take risks now. Be patient, watch and wait. Ignore the sirens that try to lure you onto the rocky shore, no matter how sweet their song.

[Laker]

All the loan owners / speculators / flippers that are on the verge of foreclosure ( shockg, lefty, etc.) are trying any cheap propaganda to calm us down saying that house prices cannot go lower than today's...
Well shockg, your agenda is like a sour spoiled milk, once it turns sour and start smelling, it aint coming back. Look at the rear view mirror if you have one, but please don't take your eyes from the front....otherwise you will crash.
Shockg, you spend to much time in looking back. forget the 2005-7 prices, will you? Say byebye to your HELOC too....

[jed]

BUT sales volume is down 20% from 12 months ago. month to month numbers tend to be volatile.

[Jon Ericson]

Wake me up when the year over year numbers improve. I'd be willing to bet that more homes will sell in May 2008 than in April 2008, just like every year. June ought to improve as well.

Families want to move in the summer so they won't have to take their children out of school. As the summer progresses, more sellers will lower prices and more buyers will lower expectations so that more deals are struck. Prices have a lot further to fall before they are rational and the bottom will likely be below that point.

[Cal]

Loosening of credit? I'd love for you to define that..

[no importa]

Spring is typically the busiest time of year for sales so it makes perfect sense to me that sales are up in April compared to the preceding months. I wouldn't read too much into this people. Of course, DataQuick reads FAR too much into these things.

[E]

There's never enough info in the data....some, obviously impossible to get.

For example...some of my questions...

Of the 37.5% of the market that were foreclosed homes, how many of those sales were sales back to the bank?

Of all the sales...how many ended up with an "end user" and not a flipper? Flippers are still buying from what I see.

[Cal]

E,

The 37.5% is not trustee sales , the DQ sales numbers do not include those actual foreclosure sales in the numbers. They are saying that 37.5% of properties that sold had a trustee sale in the last 12 months.

[Laker]

E, Flippers were still buying as of February 2008. Most of them are stuck now, and i've seen some that put FOR RENT signs. One just cash refinanced his as he paid cash $500,000 and will rent it out too in which he will subsidize the renter for a year...I think he thinks market will rebound next year so he could sell at profit...
I've also found the the issue with banks unloading properties in bulk for 50-60 cents on the dollar and than the buying company - aka professional flipping company trying to sell with 30% markup...right now, they are stuck....

[Puckhead]

Robert,

I think it was you who said in the blog a few months ago that you were short the market via ETF's. Unlike others on this board, I give you credit for taking a stand and putting your money where your mouth is, but your short bets don't look too good right now. I went the opposite way and starting buying after the Bear fiasco. I guess I’m taking the half full view instead of the half empty view. I’m seeing the economy taking some huge hits via high oil prices, deteriorating dollar and collapsing RE market and it’s still standing. Wobbly yes, but still standing. What I see in the out months is that we’ve taken the best hits from all three and that things will stabilize. Maybe not get better, but I think the economy can handle and digest things as long as we get some sort of stabilization of prices and I think we’re closer to there than the beginning. There’s no fundamentals that support the price of oil where it is today, either via supply/demand or the weak dollar. This run up reminds me of the run up of dot.com stocks and the later stages of the RE bubble. The call last week by Goldman of $500 oil reminds me of the call for $1000 Amazon. We’re at the later stages of the runup and people are getting way too optimistic about both. Not saying that we might not touch $150 oil, but I’m betting that we’re closer to top than bottom. It does not do the EU any good to have the Euro where it is now. European companies will have a harder time exporting and competing in the world economy with the Euro as strong as it is. We’re going to see a continual decline in the spread between the Euro and Dollar. If I’m wrong, oh well, I’ve been wrong on calls before. As long as I have enough powder to play another day I’ll be alright. Good luck.

[E]

Thanks Cal...appreciate the info.

Always look forward to reading your posts.

[l.a.guy]

"In Los Angeles County: Sales were down 30.6% from year-ago levels"

That's kind of meaningless stat because those were bubble sales not reflecting a realistic market. I would think Y/Y numbers will be down dramatically until at least August of this year.

[Robert in Palm Springs]

Puckhead,

I did short the market, sold them at a nice profit and will short again soon.

I agree with you on oil: these prices cannot be sustained. However, by the time it drops, too much damage will be done. Everyone (i.e. hedge funds) keeps chasing bubbles and they just keep popping which is their nature. Oil is one more bubble.

History tells us (if we dare to look back far enough) that the worst cannot be over. There is too much debt and no foundation on which to build a real recovery. The loss of high paying jobs, no personal savings, and the war have depleted our resources that we need to rebuild. We have to pay for our excesses and we haven't even come close.

Good luck to you, too. I always like to read another point of view.

[dw]

The Times sure spun the DQ article, which was headlined "Southland home sales highest in eight months." The Times just reported the negatives. Just like the Times was calling for a bubble to burst for a year while the prices were still going up. People are now getting back in the market. Prices remained steady from March. People that wanted to sell and listened to the Times before sold before the peak. People that want to buy and listen to the Times now will miss the bottom. The numbers show that prices are steady and sales are increasing. As sales increase, so will prices. Wait at your own peril.

[david]

The U.S. economy is in terminal decline. There is NO WAY to improve it, to save it, without having it DIE first.

Has there been riots in the streets yet?

Have we gone through another civil war yet (between the coastal states and the inland hillbilly states)?

Has the dollar completely and utterly crashed and been retired yet?

The United States "sells" the world nothing, but "buys" from the world almost everything it consumes.

How long would your family last if it has NO INCOME, or makes only one thousand bucks a month, but spends TEN THOUSAND each and every month at the same time?

Answer: You keep on handing out IOUS to those shops you frequent.
Until they stop doing business with you. Then you die.

The U.S. is on terminal decline, because the MAJORITY OF AMERICANS DON'T WORK.

That's right, Americans don't work. They play house with each other all day long with their service jobs.

Time for America to die and be forgotten. Finally.

[puckhead]

Lol's David, nice post. Serious question, if you think it's time for America to die and is a good thing, why do you stay? I mean, if I felt that way, no way in hell I'm living here.