Million-Dollar California Home Sales Hit A Low

Source : The Business Times, February 5, 2009

(LOS ANGELES) The number of California homes sold for US$1 million or more plunged to a five-year low in 2008 as banks tightened lending, data provider MDA DataQuick said here on Tuesday.

A total of 24,436 homes in California sold for at least US$1 million last year, down 43 per cent from 2007, San Diego- based MDA DataQuick said in a statement. It was the lowest sales count for million-dollar homes in the state since 2003.

'A lot of home sales in the upper half of the market have been on hold for months, waiting for financing,' MDA DataQuick president John Walsh said in the statement.

The drop in high-end home transactions came amid a 2.6 per cent increase in sales for California homes overall in 2008. That gain was driven by sales in less expensive parts of the state, where foreclosures dominate real estate transactions.

Homes that sold for US$1 million or more represented 6.2 per cent of all California home transactions last year. Of last year's sub-US$1 million home sales, at least 2,052 homes had previously sold for more than US$1 million, said MDA DataQuick, a unit of Richmond, British Columbia-based MacDonald, Dettwiler & Associates Ltd.

Throughout California, there were 608 home sales for more than US$5 million last year, while 386 sales were in the range of US$4 million to US$5 million, and 963 were US$3 million to US$4 million.

The number of homes sold for more than US$5 million reached a record last year, rising 7.6 per cent from 2007, MDA DataQuick said. Buyers of more than half of those homes paid in cash.

The drop in sales of high-end California homes came as mortgages were harder to get. About 45 per cent of respondents in a Federal Reserve Board survey of senior loan officers said they had tightened their lending standards on prime mortgages over the previous three months, and almost half of the 25 banks that offer non-traditional residential mortgages said they tightened standards on such loans, the board said last month.

The California statistics include home sales where public records showed there were a buyer and a seller, money changed hands, and ownership of property was legally transferred, MDA DataQuick said. The company compiles its surveys using county records and supplies real estate information to customers including public agencies, lenders and title companies.

The most expensive confirmed purchase last year was an 11,407 square foot home in the Los Angeles enclave of Bel Air, MDA DataQuick said. The six-bedroom, 10-bathroom house, built in 1926, sold for US$38 million last October.

The largest California home sold last year was a 20,000 sq ft house with four bedrooms and eight bathrooms in Orange County's Corona del Mar area. While the sale price wasn't available, public records show the April purchase was financed with a US$17.6 million mortgage, MDA DataQuick said.

The median-sized million-dollar home sold in California last year was 2,494 sq ft and had four bedrooms and three bathrooms. The median price per sq ft for all US$1 million-plus houses was US$569, down 3.3 per cent from 2007, MDA DataQuick said. Newly built homes accounted for 2,933 of last year's high-end home sales, down 53 per cent from 2007.

California, the most populous US state, has 8.51 million homes. Of those, 254,745, or 3 per cent, are valued at more than US$1 million by county assessor offices, MDA DataQuick said.

Last year, 5,243 notices of default, the first step of the foreclosure process, were recorded on homes that had sold for US$1 million or more. The actual losses of such homes to foreclosure totalled 1,612. -- Bloomberg