Southern California November Real Estate Sales: “Underwhelming”

Southern California home sales plunged in November, falling with a 10.4 percent thud across Riverside County and by the same percentage in the entire six-county region, the latest report from San Diego-based DataQuick said.
DataQuick president John Walsh called the performance “underwhelming.”
The month was far from flamboyant by DataQuick president John Walsh’s standards because of two likely culprits: Low inventory and a pullback in home-buying and consumer confidence during the early-October fiasco on Capitol Hill over ways to resolve the debt ceiling.
Consumer confidence waned. FHA-backed mortgages that were not well into the escrow pipeline hit a few snags during the federal government shutdown. Investor and cash buys dissipated, too.
“There’s demand out there, but for a variety of reasons, Southern California did not see home selling that was commensurate with the level of demand,’’ said DataQuick analyst Andrew LePage.
Collectively, sales in Southern California fell below the seasonal average. Southland sales have shown a decline of 7.6 percent, on average, every October and November since 1988 when DataQuick statistics begin.
Every county in Southern California had a year-to-year drop in sales in November:
Faring the worst was Ventura County, with new and existing home sales plummeting 16.5 percent from November 2012. The smallest decline was reported in San Bernardino County with 2,130 sales in November, a 7.6 percent drop from the 2,304 sales in November 2012.
Riverside County, with a 10.4 percent drop in home sales in November, closed the books on 2,934 sales. That’s down from 3,274 sales in November 2012.
Gene Wunderlich, government affairs director with the Southwest Riverside County Association of Realtors, said he thinks the drop in sales is based on consumer skittishness.
There are still a lot of unresolved variables out there, he said, citing the unknown variables of the Affordable Care Act, rising mortgage rates and consternation over the new maximum Federal Housing Administration loan limits for Riverside and San Bernardino counties homebuyers that take effect on Jan. 1.
The FHA-loan limit will fall 29 percent from $500,000 to $355,350 on Jan. 1, a reduction of $144,650.
“The combination of all that has consumers still a bit rattled,’’ Wunderlich said. “The two entities that drove our market the hardest — investors and first-time buyers — are backing out of the market right now.”
Rich Simonin, owner of Westcoe Realtors in Riverside, sees a market that is clearly in transition.
“The market has transitioned from one in which the listing side — the ownership side of the equation — was once dominated by banks,’’ Simonin said. “This year, we’ve transitioned from repos and short sales back to regular home owners with equity. They’re now a big part of the equation.”
The dip is not unlike the lag between tides, he said.
“Naturally, you will have some slack as you see the banks get out of the market,’’ Simonin said. “The sellers are starting to return. But sellers don’t all jump in at once.”
The statistics from Riverside alone show how far the market has shifted, Simonin said. Out of 595 homes for sale, 502, or 84 percent of all listings, are standard sales. Only 26 properties have been taken back by a bank. Fifty-six units in the pool of 595 homes were listed as short sales.
“Banks are pretty much out of the equation,’’ he said.
While sales dropped noticeably in November, the blockbuster gains that Southern California has seen on median price did not wane.
Every county saw median sale prices rise by more than 15 percent year over year.
Riverside County’s November median on all existing, new and condo sales rose 20.1 percent to $275,000 from $229,000 in November 2012. The median price on all home sales in San Bernardino rose 19.4 percent to $218,500, up from $183,000 one year earlier.
Tight inventory continues to be the trump card on price. More keys are also being turned on sales of the newly built house.
“Price has come a long way, and it’s put a crimp in affordability for some people,’’ LePage said, prompting some buyers to take a pause and to push them into condo purchases. First-time homebuyers are down to the lowest level in eight years, Wunderlich said.
Out of Riverside County’s 2,934 total sales in November, 2,143 transactions involved existing homes — some 16 percent fewer than November 2012. The 343 condo sales and 448 new home sales that closed escrow in November were up 11.7 percent and 7.4 percent, respectively from November 2012.
San Bernardino County’s 1,797 existing home sales were down 12 percent from November 2012, but the 144 condo sales and 189 new home sales reflected gains of 6.7 percent and 54.9 percent from the year earlier.
Foreclosure re-sales in Riverside County fell to 7.5 percent of the transactions, the lowest since April 2007. One year ago, roughly 18.3 percent of all sales involved bank-related properties. In San Bernardino County, 11.2 percent of all transactions involved distressed property. That was the lowest ratio the county has seen since the housing bubble burst.
Absentee buyer interest fell in November as well, LePage said.
The percentage of absentee and vacation home buyers in Riverside County was 27.8 percent, down from 33.3 percent of all buyers in November 2012. In San Bernardino County, the percentage of investor-type of purchases was 35.1 percent, down from the April peak of 40.2 percent.
The median price on condos rose 31 percent in November to $206,000 in Riverside County and 19 percent to $196,500 in San Bernardino County. The November new home median, at $337,000 in Riverside, is up 13.3 percent from the year earlier. In San Bernardino, the $387,500 median sale price on a new home reflects a 21.8 percent jump from November 2012.
Even with the improving market conditions on price, Wunderlich said many in the industry will pay close attention to what happens in January.
“The first quarter will tell the tale,’’ he said