Dennis' Mortgage Blog

Last month I wrote on the increase in home sales in June from May 2011 to the highest number of sales in the previous twelve months.  This month I cannot write that as DataQuick of La Jolla California reports that sales from June to July 2011 dropped almost twelve percent for the Southern California counties of Ventura, Los Angeles, Orange, San Diego, Riverside and San Bernardino.

Just over 18,000 new construction and resale houses and condominiums sold in July, the lowest number for July sales in four years.  Finally able to compare year-to-year sales without the homebuyer tax credits that were available through June 2010, sales in July 2011 were approximately 850 units, or 4.5% from July 2010.

In breaking down the data the drop is not as bad as it seems since in July 2011 there were only twenty business days, two less than June.  Comparing the average number of sales per day the drop was 3.7% from June and 1% from July 2010.  Still a drop but less dramatic, especially considering the relative high number of sales for June.

Despite low rates in July that made homes more affordable, consumers apparently were more concerned with economic reports showing the stagnant economy and continued employment issues across the country.  As a result of the drop in transactions the median price for the region dropped slightly to $283,000 from $285,000 in June 2011 and $295,000 in July 2010.

In Los Angeles County the median price from June to July dropped 5.6% to $320,000; for Orange County the median was down 2.8% for the same period to $437,500.  Keep in mind the median price includes condominium units, new construction homes and condos and existing homes and condos across the entire region or county.

Speaking of new construction, the news continues to be bad for home builders.  In July new home builders sold just 1022 homes and condo, down almost 27% from June and down 7.3% from July 2011.  The total number of new homes sales in July was the lowest for any July in DataQuick's reports, the company began reporting on real estate sales and data in 1988.

Cash buyers, mostly investors, were 28.2% of the market paying a median price of $214,000 or about 75% of the total median price.  FHA financed homes consisted of 31.5% of the market in July.

Sales typically drop from June to July about four to five percent in most markets so the drop in sales is not unexpected.  Looking at the day to day transaction drop of 3.7% from June to July the drop in home sales from June to July appears to be below the historical average. 

In terms of volume the drop is within expectations for June to July, the drop in median prices however is outside the norm and could be the cloud around the potential silver lining of a home sale market that could be stabilizing in the region.

Rates are near all time lows this week.  Call today to inquire about your new home loan or refinancing your existing mortgage, 562-472-1118.