Dennis' Mortgage Blog

This morning DataQuick released Southern California home sales data for June 2011, and the news was positive for homeowners.  Sales in the state reached their highest point in the past twelve months with 20,532 new and existing houses and condos sold in Southern California Counties (Los Angles, Riverside, Orange, Ventura, San Diego and San Bernardino).  Sales were up 11.6% from May 2011, but still down from last June’s sales by 14%.  The decline from last June is in large part due to the extraordinary volume that was a result of the homebuyer tax credits expiring. 

Breaking down the price points, sales from May to June rose 6.3% for homes sold below $200,000 and were virtually unchanged for homes over $800,000.  Of concern to the market, the cloud around the silver lining if you will, is the decline in sales of 4.9% from May within the move-up market of $300,000 to $800,000 homes.  The “move-up” market is so broadly defined due to the price variances between the lower priced counties of San Bernardino and Riverside compared to higher priced counties such as Orange and many parts of San Diego, Ventura and Los Angeles.

Prices are generally more important to homeowners than volume, and the DataQuick report did not disappoint with the median price in June up 1.8% to $285,000 from May’s median of $280,000.  The median was the highest since December 2010 but down from the $300,000 median hit last June.

Since 1988 when DataQuick began tracking and reporting on real estate sales June has averaged a 6.2% increase in sales from May.  The low in sales for the region was 18,032 in 2008 and the high was in 2005 at 40,156.  

Tracking highs and lows of prices the $285,000 was over 15% higher than the low in the current real cycle.  Our current market appears to have bottomed out in April 2009 at $247,000—so if you bought the median home at that time you have seen a nice return over 2 years, though I am not sure where this median house is as I have seen no appraiser that supports a 15% increase over the past fourteen months.  To the contrary, if you bought the median priced home in May to July of 2007 you paid $505,000 and have lost almost 44% of your value.

In looking at median prices one must be careful to understand the data presented.  The median is the exact middle of all units in the data, for instance if sales in hundreds of thousands in one community were $125, $125, $125, $130, $250, $275, $300 the median sales price is $130,000—the middle price sold; comparably the average price is $190,000 (total sales divided by number of sales).

Because of this the greater activity at the lower end of the price scale moves the median sales price down along with the soft real estate market creating lower prices; a double whammy so to speak.  Also impacting the median sales prices are the new housing market.  Historically newly built homes sell for more than existing homes, the depression in the new home market has also impacted the median sale price for the region. 

Some silver lining and clouds to close our report from DataQuick president John Walsh, “The housing market remains dysfunctional and lopsided, just somewhat less so than it was a few months or a year ago.”

Mortgage rates continue to remain low for the time being.  Call or email Dennis today to determine your purchasing power for a new home loan or monthly savings from a refinance.  Direct dial 562-472-1118