Southern California 2012 Real Estate Market Trends

SOUTHERN CALIFORNIA REAL ESTATE SALES CONTINUE TO INCREASE

Southern California home sales increased month over month and year over year, as of February 2012; There were 15,573 real estate sales throughout the 6 counties that make up Southern California, last month. These numbers marked an increase of 7.2%, from January, 2012, and an 8.4% increase from February of 2011.

DOUBLE DIGIT REAL ESTATE SALES INCREASES IN 2 SOUTHERN CALIFORNIA COUNTIES

A slight jump in Southern California real estate sales is normal from January to February, but this increase was above average for this time of year. In fact, all 6 counties in Southern California posted an increase in real estate sales, for the month of February, with double digit increases in San Diego County and Los Angeles County!

THE SOUTHERN CALIFORNIA REAL ESTATE MARKET IS HEATING UP

The recent uptick in activity, combined with low inventory in most regions, and a record breaking number of cash purchases and absentee buyers, are all indications that the Southern California real estate market is heating up, and we haven't even hit the summer months yet!

SOUTHERN CALIFORNIA FORECLOSURES DOWN AND SHORT SALES UP

Southern California real estate sales continue to be dominated by foreclosure and short sale properties. However, once again, the number of foreclosures decreased year over year and the number of short sales increased from February, 2011. This appears to be a trend in Southern California, as lenders are working with homeowners more, and short sales have become more streamlined. In addition, many lenders are offering incentive payments, to entice homeowners to short sale, rather than allowing their home to fall into foreclosure.

As mentioned in previous reports, the number of Southern California foreclosures and short sales should be kept in perspective. While a great deal of Southern California homeowners are struggling at this point in time, it's important to remember that these percentages also reflect traditional seller’s sentiment; The majority of homeowners that do not need to sell right now, have decided to wait out the down market, which explains extremely low inventory levels. If more traditional, non-distressed Southern California homeowners put their homes on the market, we would certainly see a shift in the percentages.

SOUTHERN CALIFORNIA ABSENTEE BUYERS REACHES RECORD LEVEL IN THE INLAND EMPIRE

Southern California absentee buyers, which are primarily real estate investors and vacation home buyers, reached a record breaking level in February, in the area known as the Inland Empire. This is due, in large part, to the steep decline in prices in this area, since the beginning of the Southern California real estate bust.

The Inland Empire, which is comprised of Riverside County and San Bernardino County, experienced a greater decline in prices and a higher number of foreclosures than the surrounding Southern California counties. This can be attributed to the number of new and newer homes that were built and sold in the Inland Empire, within the past 5-10 years. Many of these Southern California homes were acquired with little to no down payment and/or negative amortization loans. Homeowners were, therefore, left upside down on their mortgage, when the real estate market began to sour.

The total number of non-owner occupied Southern California real estate purchases remains nearly 13% higher than the average number of such purchases, over the past 12 years.

PREFERRED SOUTHERN CALIFORNIA HOME LOANS IN FEBRUARY 2012

ARM LOANS: The number of Southern California properties purchased with Adjustable Rate Mortgage loans (ARMs) dropped year over year, from 7.7% in February 2011.

JUMBO LOANS: The use of Jumbo loans, to purchase Southern California real estate, is still far below the peak of the current real estate cycle, when 40% of all Southern California properties were purchased with these high balance home loans. It is also a decrease from the February 2011 figure of 15.6%.

CASH PURCHASES: The number of all cash purchases jumped to a record breaking level in February 2012, as the percentage of buyers using all cash to purchase Southern California real estate increased to a whopping 32.8%. This is 200%+ higher than the 12 year average of 15.2%.

FHA LOANS: While still popular, due to the low down payment and lenient qualification guidelines, the use of FHA loans, to purchase Southern California real estate, continues to decline. This may be due to several factors, including the decrease in housing prices in Southern California, and the fact that more buyers are eligible for traditional financing. However, it may also be a reflection of the recent changes to the monthly Mortgage Insurance Premium payment that Southern California FHA borrowers are required to pay.

HIGHEST SOUTHERN CALIFORNIA REAL ESTATE ACTIVITY FOR THE PAST 5 YEARS

February 2012 sales figures ranked as the highest amount of Southern California real estate sales, for the month of February, in the past 5 years!

• Ventura County’s Real Estate Sales Increased +3.8%

• Ventura County’s Median Sales Price Decreased –5.8%

• Los Angeles County’s Real Estate Sales Increased +11.1%

• Los Angeles County’s Median Sales Price Decreased –5.1%

• Orange County’s Real Estate Sales Increased +0.1%

• Orange County’s Median Sales Price Decreased –5.2%

• San Diego County's Real Estate Sales Increased +16.3%

• San Diego County's Median Sales Price Increased -1.0%

• Riverside County’s Real Estate Sales Increased +5.9%

• Riverside County’s Median Sales Price Decreased –1.0%

• San Bernardino County’s Real Estate Sales Increased +5.5%

• San Bernardino County’s Median Sales Price Decreased –1.3%

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