Statewide, 28,111 new and existing homes were sold in February, up 1% from January, and down 4% from February one year ago. These sales, however, do not include trustee’s sales completing foreclosures. [For more information on trustee’s sales, see the first tuesday April article, Increase in NODs and NOTS become a buildup of REO]

The statewide price paid for the phantom median-priced new or existing home was $249,000, up 1% from January and up 11% from one year ago. This reflects an increase in sales volume (not price) of mid-tier and high-tier single family residences (SFRs) and a decrease in sales volume (not price) of low-tier SFRs. These median dollar amounts, percentages and trends do not represent the market conditions for any housing except by mere coincidence. Actual same-home, same-tract prices may be going up or down, a fact that movement in the median price cannot capture.

Of the homes sold statewide, 44% were resales of foreclosed real estate owned (REO) properties, down from 59% one year ago when REO properties were in greater abundance due to the lack of federal and state intervention in recording NODs.

The typical mortgage payment a homebuyer committed himself to paying in February was $1,068 statewide, but $1,180 in So Cal. The trend in the typical monthly mortgage payment in So Cal as a percent of an individual’s earnings is essentially unchanged from one year earlier.

Real estate speculation has continued to be at historically high levels. Cash buyers made up 30% of the So Cal purchases in February, consistent with the 30% in January. This percent of cash buyers is significantly higher than the monthly average for the past 22 years in So Cal for cash purchases, only 14%. However, homes sold by flippers (those who buy and sell homes within a three-week to six-month period) only accounted for 3% of So Cal sales for February, up from 2% in February of last year.

Additionally, investors and second-home buyers accounted for purchases of 19% of the So Cal homes sold in February.

first tuesday take:

Median price has no reason to exist. It has no predictive power and sets no trend that suggests meaningful activity. We repeat it because it is available information.

Less than half of the sales in February went to owner-occupants. Sales were driven by speculation and investors. Speculators merely inflate the sales numbers, which results in a distorted picture of market strength and stability. The recent slight price increase is most likely the last upswing of the “dead cat” bounce we have been experiencing in California since mid-2009. Do not expect a permanent or sustainable rise. Prices will not stabilize until 2012, and will not begin a sustained rise until 2013. [See first tuesday February market chart, Home sales volume and price peaks.]

Cash sales are over double the historic average, but flipping is only at 3%. Speculators are in their hording phase, holding onto properties and waiting for prices to increase. For most, the wait will be too long and the rents will be too low. These properties will be dumped back into the market before the market starts to heat up, just as they were dumped in 1994 and 1995 after that recession’s dead cat bounce.

Re: “California Statewide February Home Sales” and “Southern California median price and sales volume up” from DataQuick