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Further slowdown for Southland home sales

<!--<i>by Real Estate Analyst John Karevoll</i><BR>--> May 15, 2007

La Jolla,CA----Southern California home sales sank to a 12-year low last month, led by striking sales drops in affordable neighborhoods. Prices were fairly stable overall, with declines largely concentrated in lower-cost markets that sizzled a year ago, a real estate information service reported.

A total of 19,269 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 11.8 percent from 21,856 for the month before, and down 28.9 percent from 27,114 for April last year, according to DataQuick Information Systems.

Last month's sales were the lowest for any April since 1995, when 15,303 homes sold. The April 1995 total was the lowest for any April in DataQuick's statistics, which go back to 1988. The strongest April was in 2004, when 37,905 homes sold. April has averaged 25,796 sales.

"The drop-off in sales of more affordable homes was expected. That was the part of the market that was last in line for price and sales increases during the upside of the cycle. What we're in for now is the somewhat painful endgame of that cycle," said Marshall Prentice, DataQuick president.

"In addition to cyclical factors, there are other potential culprits behind the current lull: a buyer-seller standoff, the huge rush to buy during the frenzy (leaving less demand for today), tighter mortgage money, or something more ominous like a severe market correction. The falloff in starter home sales has the effect of pushing median prices up a bit, although it's still somewhat surprising prices haven't declined more," Prentice said.

The median price paid for a Southland home was $505,000 last month, the same as the March record. It was up 6.1 percent from $476,000 for April last year. When adjusted for shifts in market mix (i.e. fewer lower-cost homes selling now), year-over-year price changes went negative in January and are roughly one percent below year-ago levels. They are about two percent below the peak in June last year.

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 $2,356 last month, up from $2,326 the previous month and up from $2,310 a year ago. Adjusted for inflation, current payments are 9.3 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 4.1 percent below the current cycle's peak last June.

Indicators of market distress are moving in different directions. Financing with adjustable-rate mortgages has declined significantly. Foreclosure activity is rising but is still within the normal range in most areas. Several inland markets are showing early signs of distress. Down payment sizes are stable and flipping rates and non-owner occupied buying activity is down, DataQuick reported.

Source: DQNews

Media calls: Andrew LePage (916) 456-7157
or John Karevoll (909) 867-9534