by Calculated Risk on 6/11/2014 03:05:00 PM

From DataQuick: Southland Home Sales Slow; Median Price Rises Again but at Slower Pace

Southern California home sales lost momentum in May, falling from both April and a year earlier as investor demand fell and buyers continued to face inventory, affordability and credit constraints. ...

A total of 19,556 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 2.3 percent from 20,008 sales in April, and down 15.1 percent from 23,034 sales in May last year, according to San Diego-based DataQuick.

On average, sales have increased 5.8 percent between April and May since 1988, when DataQuick’s statistics begin. Sales have fallen on a year-over-year basis for eight consecutive months. May sales have ranged from a low of 16,917 in May 2008 to a high of 35,557 in May 2005. Last month’s sales were 23.0 percent below the May average of 25,393 sales.
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“We expected rising prices to unlock more inventory this spring and that's happened. But the supply of homes for sale still falls short of demand in many markets, contributing to a rise in prices and a below-average sales pace. The drop in affordability has also hampered activity, helping to explain how sales could be lower now even though today’s inventory is higher than a year ago. The recent dip in mortgage rates will help fuel demand, adding pressure to home prices. But the sort of price spikes we saw this time last year – annual gains of 20 percent or more – are less likely today given affordability constraints, higher inventory and the drop-off in investor purchases,” said Andrew LePage, a DataQuick analyst.

Foreclosure resales – homes foreclosed on in the prior 12 months – accounted for 5.0 percent of the Southland resale market in May. That was down from a revised 5.8 percent the prior month and down from 10.9 percent a year earlier. In recent months the foreclosure resale rate has been the lowest since early 2007. In the current cycle, foreclosure resales hit a high of 56.7 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 6.6 percent of Southland resales last month. That was up slightly from a revised 6.2 percent the prior month and down from 15.7 percent a year earlier.

Absentee buyers – mostly investors and some second-home purchasers – bought 25.0 percent of the Southland homes sold last month, which is the lowest share since September 2011, when 24.6 percent of homes sold to absentee buyers. Last month’s figure was down from 26.7 percent in April and down from 29.5 percent a year earlier. The peak was 32.4 percent in January 2013, while the monthly average since 2000, when the absentee data begin, is about 19 percent.
emphasis added

Both distressed sales and investor buying is declining - and this has been dragging down overall sales.  Even though total sales are still down year-over-year, the percent of non-distressed sales is up slightly year-over-year.  There were 19,556 total sales this year, and 11.6% were distressed.  In May 2013, there were 23,034 total sales, and 26.6% were distressed.