A total of 20,581 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in March 2013. That was up 29.1 percent from 15,945 sales in February, and up 3.1 percent from 19,953 sales in March 2012, according to San Diego-based DataQuick.

Sales normally jump between February and March, with that month-to-month gain averaging 36.4 percent since 1988, when DataQuick’s statistics begin.

Last month’s sales were the highest for the month of March since 21,856 Southern California homes sold in March 2007, but they were still 15.1 percent below the March average of 24,254 sales. The low for March sales was 12,808 in 2008, while the high was 37,030 in March 2004.

The median price paid for all new and resale houses and condos sold in the six-county Southern California was $345,500 last month, up 8.0 percent from $320,000 in February and up 23.4 percent from $280,000 in March 2012. Last month’s median was the highest since July 2008, when it was $348,000.

The median has risen on a year-over-year basis for 12 consecutive months, and those gains have been double-digit – between 10.8 percent and 23.5 percent – since last August.

“It’s remarkable how much the housing scene has changed in a year. At this point in 2012 there were still plenty of folks sitting on the market’s sidelines, waiting to be sure the recovery was real. But gradually the psychology shifted as the economy picked up steam and mortgage rates fell to historic lows. We’re seeing the release of a lot of pent-up demand, especially in the middle and higher-priced neighborhoods where activity had been sluggish for years,” said John Walsh, DataQuick president.

“Price measures continue to rise for two simple reasons,” Walsh added. “First, demand for homes has risen at a time when the available supply is unusually low. Prices have had nowhere to go but up in many areas. Second, the gains are especially high right now because of the change in market mix: Sales of lower-cost homes have fallen at the same time activity in the higher price ranges has risen.”

It appears that better than half of last month’s 23.4 percent year-over-year gain in the Southern California median sale price reflects rising home prices, with the balance reflecting the change in market mix.

Some of the biggest price gains have come in the lower end of the market, which was hit hardest by foreclosures and price declines during the downturn. In March, the lowest-cost third of Southern California’s housing stock saw a 24.6 percent year-over-year increase in the median price paid per square foot for resale houses. The gain from a year earlier was 17.1 percent for the middle third of the market and 14.3 percent for the top third.

Sales continued to surge in move-up markets last month. The number of homes sold in March for between $300,000 and $800,000 – a range that would include many move-up buyers – rose 29.5 percent year-over-year. The number of homes sold for $500,000 or more jumped 40.2 percent from one year earlier, while sales of $800,000-plus homes increased 33.4 percent year-over-year.

Last month, 27.2 percent of all Southland home sales were for $500,000 or more, compared with a revised 24.4 percent in February and 19.6 percent a year earlier.

Sales continued to fall on a year-over-year basis in many lower-cost communities. The number of homes that sold below $200,000 last month declined 33.3 percent year-over-year, while sales below $300,000 dipped 24.5 percent. Sales in many affordable markets have been limited not by a lack of demand, but by a lack of supply. The latter has two main causes: First, a relatively high percentage of owners can’t afford to put their homes up for sell because they owe more than the homes are worth. Second, foreclosures are way down.

Last month foreclosure resales – homes foreclosed on in the prior 12 months – accounted for 13.9 percent of the Southland resale market. That was down from 16.2 percent the month before and down from 31.5 percent a year earlier. Last month’s figure was the lowest since it was 13.6 percent in 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 21.5 percent of Southern California resales last month. That was down from an estimated 22.3 percent the month before and 24.6 percent a year earlier.

The share of investor and cash buying remained near all-time highs.

Absentee buyers – mostly investors and some second-home purchasers – bought 30.6 percent of Southern California homes sold last month. That was down from 32.3 percent in February and up from 28.2 percent a year earlier. The record was 32.4 percent in January, while the monthly average since 2000, when the absentee data begin, is 18.0 percent. Last month’s absentee buyers paid a median $274,000, up 29.2 percent from a year earlier.

The share of homes flipped has trended higher in recent months, though it edged lower last month. In March, 6.1 percent of all Southern California homes sold on the open market had previously sold in the prior six months, down from a flipping rate of 6.7 percent in February and up from 4.0 percent a year ago. (The figures exclude homes that were resold after being purchased at public foreclosure auction sales on the courthouse steps.)

Buyers paying with cash accounted for 34.1 percent of last month’s home sales, compared with a record 36.9 percent the month before and 32.4 percent a year earlier. Since 1988 the monthly average is 16.0 percent. Cash buyers paid a median $280,750 last month, up 30.6 percent from a year ago.

Credit conditions have shown signs of modest improvement.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 23.8 percent of last month’s Southern California purchase lending – the highest since September 2007, when jumbos made up 26.9 percent of the market. Last month’s figure was up from 21.1 percent the prior month and 16.4 percent a year earlier. In the months leading up to the credit crunch that struck in August 2007, jumbos accounted for around 40 percent of the home loan market.

With fixed rates on 30-year loans so low, and aversion to risk in the marketplace high, the use of adjustable-rate mortgages (ARMs) remains very low in an historical context. Last month 7.4 percent of Southern California home purchase loans were ARMs, up from 5.6 percent the prior month and up from 6.2 percent a year earlier. Last month’s figure was the highest since ARMs were 8.5 percent of the purchase loan market in August 2011. Since 2000, a monthly average of about 33 percent of Southland purchase have been ARMs.

The most active lenders to Southern California home buyers last month were Wells Fargo with 8.2 percent of the purchase loan market, imortgage.com with 2.8 percent, and both Prospect Mortgage and Bank of America with 2.4 percent.

Government-insured FHA loans, a popular low-down-payment choice among first-time buyers, accounted for 22.9 percent of all purchase mortgages last month. That was down from 24.6 percent the month before and 30.0 percent a year earlier. In recent months the FHA share has been the lowest since summer 2008. The decline reflects tighter FHA qualifying standards implemented in recent years as well as the difficulties first-time buyers are having competing with investors.

DataQuick 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 Southern California buyers committed themselves to paying last month was $1,252, up from $1,154 the month before and up from $1,063 a year earlier. Adjusted for inflation, last month’s typical payment was 47.8 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 57.3 percent below the current cycle’s peak in July 2007.

Indicators of market distress continue to move in different directions. Foreclosure activity remains well below year-ago and far below peak levels. Financing with multiple mortgages is very low, and down payment sizes are stable, DataQuick reported.

Source: DQNews.com

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A total of 145,797 condos and houses were bought without mortgage financing in 2012, a record. That was up from 125,812 in 2011, the previous high. In 2007, as the housing market deflated, cash sales totaled 39,731, according to San Diego-based DataQuick.

“It’s clear that a lot of today’s housing market recovery is being fueled by people putting their own money into homes. Some cash buying is part of a normal housing market, but we’re at twice that normal rate. There are always some rich people, also buyers from abroad, but in a normal market the biggest single category would be retirees and empty-nesters who are down-sizing. Today, a lot of buyers are chasing what they view as the deal of a lifetime,” said John Walsh, DataQuick president.

Cash purchases accounted for a record 32.4 percent of California’s overall home sales last year, up from 30.4 percent in 2011 and more than double the annual average of 15.6 percent since 1991, when DataQuick’s cash statistics begin.

“I’m sure a lot of today’s cash buyers would love to take advantage of the current low mortgage interest rates, but since the ‘loans-gone-wild’ days of 2004-2006, the lending pendulum has swung to the opposite end of the spectrum. Even a lot of well-qualified buyers can’t get loans. While the market overall is improving, sales levels are still below average, and prices much closer to the bottom than to the peak,” he said.

Last year a total of 447,573 homes were sold in California to all buyers, whether they used a loan or cash. While up from the cyclical low of 383,748 sales in 2007, last year’s total was well below the peak of 775,831 sales in 2004, and it was about 13 percent below the state’s average annual home sales since 1988.

The median price paid for a California home, whether financed or bought with cash, was $275,000 in 2012, up 10.0 percent from $250,000 in 2011. The annual median peaked at $469,500 in 2006, and bottomed out at $245,000 in 2009. Around half of the median’s peak-to-trough drop can be attributed to shifts in market mix.

DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

Cash buyers paid a median $205,000 last year, up 17.1 percent from $175,000 in 2011. Buyers who financed with a mortgage paid a median $305,000 in 2012, up 10.5 percent from $276,000 a year earlier, DataQuick reported.

Last year more all-cash deals occurred above the $500,000 threshold, and fewer below $100,000. Cash-only purchases of $500,000 or more rose 35.0 percent compared with 2011. That compares with an 11.2 percent decline in the number of homes cash buyers purchased below $100,000.

Some buyers in the mid- to high-priced markets used cash either because they couldn’t qualify for a loan or wanted to better their chances of prevailing in bidding situations. It’s likely that in the sub-$100,000 market cash-paying investors simply couldn’t find enough homes for sale in that price range. Inventory in affordable neighborhoods has generally been low because foreclosures have slowed, meaning less supply, and many people in these areas still owe more than their homes are worth, hence they can’t sell.

Investors and vacation-home buyers bought roughly 55 percent of all homes purchased with cash last year. Multi-home buyers, meaning those purchasing two or more properties, accounted for about 28 percent of last year’s cash sales, up from around 24 percent in 2011, according to an analysis of buyer names in the public record.

Last year more than 11,700 cash-paying, multi-home buyers collectively purchased about 41,450 homes. Compared with 2011, that marked a nearly 19 percent increase in the number of multi-home buyers and a roughly 36 percent jump in the number of homes they bought. In 2012, individual investors or partnerships paying cash bought as many as 1,300 homes, although the vast majority (88 percent) of these multi-home cash buyers bought fewer than five, and 65 percent bought two.

While cash purchases are up in all areas, there are regional differences. For example, in San Mateo County 24.2 percent of the purchases were cash, while in Merced County it was 42.9 percent.

Among the California zip codes with at least 100 sales last year, the two with the highest cash purchase rate were in Orange County’s Laguna Woods 92637, with 74.0 percent of the homes sold going to cash buyers, and Riverside County’s Indian Wells 92210, with 71.6 percent.

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In a September “home value forecast” Pro Teck supports the notion that the U.S. foreclosure inventory is not a problem on a national level, but rather concentrated in specific local markets. All three Southern California counties – San Diego, Los Angeles and Orange County – already have less than 5 months of remaining inventory left, putting us into seller’s market territory. “This is significant because in the Los Angeles market over the past 25 years, whenever this indicator was below 5 months, the median price increased by close to 19% the following year,” said Tom O’Grady, CEO of Pro Teck. ” Of course, it remains to be seen whether the same appreciation happens again.”

The report also shows that the areas with the lowest price per square foot have the lowest levels of inventory, suggesting fewer options for buyers in that price range. While there is no doubt a shadow inventory of foreclosures will eventually come to the market, it is not the threat it was once thought to be.

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Proposition 13 puts a cap of 2% on residential real estate taxes with most areas on California hovering around 1%. This gives the real estate consumer peace of mind that in the future their property taxes will not increase arbitrarily. Prop 13 interplays with other propostions, notably Proposition 60. Proposition applies to people over 55. Basically, it allows a person a one-time property tax transfer from one residence to another. For example, you bought a home in 1985 for $300,000 and you currently pay $3,000 per year in taxes. If you sell that residence, then purchase say a $1 million property, you can keep your old tax base of $3,000. If Prop 60 did not exist, you would pay the new property tax base of around $10,000 per year; quite a savings indeed.

There are some important nuances that surround these and other propositions, for a complete analysis of your unique situation please contact your Versailles professional.

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That’s key highlights of July’s DataQuick stats, when we looked that the report at the community level. Also:

• 41 of O.C.’s 83 ZIP codes with gains in their respective median selling price. Overall, buyers’ prices were +2.9% vs. a year ago.
• Taking sales volume in consideration, home-sale pricing is up in ZIPs representing 45% of the Orange County market.
• 8 of 83 O.C. ZIPs with median sales prices above $1 million in the period vs. 11 million-dollar ZIPs when the county median price peaked in June 2007. Since that pricing pinnacle, there’s been a 30% drop in the countywide median price!
• Current million-dollar ZIPs were 7% of all sales in the most recent period tracked.
• Million-dollar ZIPs had 227 home sales in this period — up 40% vs. a year ago.
• There were 4 ZIPs with medians under $250,000 vs. 4 a year ago. ZIPs with medians under a quarter million had 3% of all sales in the most recent period.
• 67 of 83 O.C. ZIPs had year-over-year sales gains in the period — or 81% of the market.
• Overall, countywide sales were up 25.7% vs. a year ago.
• NOTE! 31 local ZIPs had both sales gains and price gains in the period. (Highlighted in green below!) These double-gainers had combined sales volume equal to 37% of the Orange County market.
• For a detailed report on the price moves, CLICK HERE!
• Chart shows data for the current period by ZIP code, ranked by sales gain …

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A new second-quarter report from Freddie Mac, which uses a different methodology, shows that home prices were up 4.8% from previous quarter, the biggest quarter-to-quarter increase in eight years.

Removing distressed sales from the equation, and CoreLogic found that June home prices fared even better, showing a 2% monthly rise and a 3.2% yearly jump. This is because homes that have been taken by the banks or that risk being foreclosed on are generally sold at significantly reduced prices.

“At the halfway point, 2012 is increasingly looking like the year that the residential housing market may have turned the corner,” said Anand Nallathambi, president and CEO of CoreLogic.

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In 2010, everyone was demanding the banks to release all their shadow inventory. Smart bank executives realized this was not a good idea on multiple levels. REOs released in bulk onto the market would have driven the market even further into a nose dive; vast inventory, weak demand and dilapidated properties is not a good mix. The banks seem to have struck a good balance with their release volume of REOs into the marketplace. They released an intelligent amount of REOs into the market, and the buying public responded appropriately. The strategy is paying off now with a healthy balance between diminishing REO shadow inventory and balanced REO sales. Simply, the banks have created healthy demand by regulating the amount of REOs on the market. An apropos analogy is that of a faucet. If the banks would have turned the faucet on full blast and released all their shadow inventory, the market would have been flooded and tanked even more. Instead, the banks have let them flow out judiciously and the proper “hydration” of these REOs has “irrigated” the housing market. For the remainder of 2012 and into 2013, look for banks to start releasing more inventory and REO sales start to uptick again.

Home prices have recently started to rise, up 7.3% for  2Q 2012 over 2Q 2011. This is the largest quarterly increase in over six years. One of the main factors for this rise in prices is fewer REO sales; shrinking REO share leads to price appreciation. Buyers want to buy these REOs, but the banks are deftly releasing inventory that elicits the proper demand response. So who are these REO buyers? The majority of this REO “buying public” is undoubtedly investors of all ilks. Everyone from individual investors to large private equity firms to investment funds, all are out in earnest looking for quality foreclosed properties. Most individual investors either “flip” the properties after making improvements or apply a “hold and rent” strategy in an attempt to generate passive income. Large institutuional buyers are by and large buying pools of foreclosed properties then renting them out, in conjunction with a property management firm. Kenneth Rosen, a UC Berkeley professor who has a consulting firm that advises real estate investors, predicts that there will be a dozen or more REITs devoted solely to single family homes in the next couple years. None of this would have happened if the banks would have flooded the market with their REOs, as many demanded.

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If you are looking for a $200,000 condo, a $3 million mansion or a large multi-family complex your outlook and expectations may vary a bit. However,  you must get out there yourself and see, feel and taste the market. Sure, rely on experts like us at Versailles but the human brain and consciousness deal much more favorably with direct experience. Within Orange County there are market fluctuations; Newport Coast is different from Santa Ana which is different from Mission Viejo. Walk or bike through the beautiful tree lined streets of West Floral park in Santa Ana, breathe in the briny breeze and staggering ocean views of Newport Coast and cruise the well laid out and family friendly confines of one of the safest cities in America, Mission Viejo. If you are an investor looking for a 100 unit multi-family, without a doubt know terms like ROI, capitalization rate and NOI. However, even in these types transactions the right brain and meaningful experience trigger the truly great deals.

Current technology is undeniably awesome. We have trillions of bits of information at our fingertips that used to take weeks, months or years to assimilate. That being said, looking up on the internet about how to learn Mandarin will not get you speaking Chinese. You have to actively engage and participate to learn and achieve your goal, finding out about real estate and the market is no different. The Versailles site you are on right now has wonderful tools to learn about many aspects of real estate and immerse digitally to help you on your unique path. The only way to find that great property, piece of land or apartment building is to get out there and directly engage. Contact Versailles today and we can make that happen.

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The positive price gains come after seven (7) consecutive months of declining home prices. Although home prices are seasonal, with the spring and early summer months being the most active, the data was largely positive, possibly indicating that the “increase in prices may be due to more than just the expected surge in spring sales,” according to David M. Blitzer, Chairman of the Index Committee at S&P Indices. “On a monthly basis, 19 of the 20 MSAs and both composites rose in April over March 2012. Detroit was the only city that saw prices fall, down 3.6%. The average price for a home is back to the levels they were in early 2003 for the 20 City Composite and to mid-2003 for the 10-City Composite.

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