DataQuick revealed that Southern California home sales activity reached a seven-year high in May due to a stronger economy, low mortgage rates and the perception that owning a home is a good investment.
During the month of May, 23,034 new and resale houses and condominiums sold in Los Angeles, Riverside, San Diego, San Bernardino, Ventura, and Orange counties. This is up 7.6% from the prior month and is a 3.8% increase from the volume of monthly sales a year ago.
Even though May’s total sales activity was the highest in seven years, it was still 10.1% below the monthly average of 25,617 sales.
“We’re deep into unchartered territory: Amazingly low mortgage rates, a razor-thin inventory of homes for sale, and the release of years’ worth of pent-up demand. Plus, there’s a seemingly endless stream of investors and non-investors who pay cash and thereby avoid the loan-qualification process,” said John Walsh, president of DataQuick.
“How this all plays out is educated guesswork at this point,” he added. “Understandably, speculation continues over whether another housing bubble is forming.”
The median price paid for all new and resale properties sold in the six-county Southland region was $368,000 in May, which is higher on a monthly and yearly basis by 3.1% and 24.7%, respectively.
According to the San Diego-based data provider, the median has risen on a year-over-year basis for 14 consecutive months, with gains ranging between 10.8% and 24.7% over the last 10 months.
Homebuyers in this region paid $4.65 billion in downpayments or cash purchases, an all-time high. Furthermore, buyers paying with cash accounted for 31.9% of all of May’s home sales. These buyers paid a median of $305,000, up 30.9% from a year ago.
Meanwhile, absentee buyers bought 29.5% of the Southland homes sold in May for a median price of $292,000.
Additionally, 10.8% of the Southland resale market for May was from foreclosure resales, the lowest figure since August 2007. Also, short sales made up an estimated 17.7% of the area’s resales for the month.