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Southern California home sales rose for the 11th consecutive month in May. Even more significant: The median price increased slightly from the prior month for the first time since July 2007.
The research firm MDA DataQuick attributes the price bounce to a shift in the type of homes sold. Previously all the action was in deeply discounted foreclosures. In May sales of $500,000-plus homes started to come back.
A total of 20,775 new and resale houses and condos closed escrow in San Diego, Orange, Los Angeles, Ventura, Riverside and San Bernardino counties last month. That was up 1.3 percent from April and up 22.8 percent from a year ago. May’s sales were the highest for that month since May 2006.
Homes sold that had been foreclosed on in the prior 12 months accounted for 50.2 percent of all resales. That was down from a peak of 56.7 percent in February. Sales of homes priced $500,000 and above rose from 15.2 percent of the market in April to 17 percent in May.
The median price paid for all new and resale houses and condos sold was $249,000, up 0.8 percent from $247,000 in April but down 32.7 percent from $370,000 a year ago. The median price hadn’t risen from one month to the next since July 2007.
“We appear to be in the early stages of the market gradually tilting back toward a more normal balance of sales across the home price spectrum,” said John Walsh, MDA DataQuick president. “We’ll see a more normal share of sales in the more established, higher-cost areas that have been nearly comatose.”
DataQuick says the big reason why higher-end sales were so slow was the lack of “jumbo” mortgages needed to buy such homes. During the boom, nearly 40 percent of SoCal sales were financed with jumbo loans. Last month it was only 12.0 percent, though that was up from 10.6 in April.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.