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Bay Area home sales in August remained higher than a year ago for the 12th consecutive month. The region’s overall median sale price declined as a greater portion of sales occurred in more affordable areas, MDA Dataquick of San Diego reported.

A total of 7,518 new and resale houses and condos closed escrow in the nine-county Bay Area last month. That was down from 8,771 in July and up 4.0 percent from 7,232 in August 2008. A thinner inventory of distressed properties on the market helps explain the drop in sales between July and August. The number of foreclosed properties that resold in August fell 15.2 percent from July.

Moreover, July was a relatively strong month for escrow closings – the strongest for any month since August 2006. July closings mainly reflect purchase decisions made in early summer, whereas August closings reflect home shoppers’ ability and willingness to buy in the middle of summer.

“Part of the mid-summer pause in the market could have been caused by home shoppers becoming frustrated by market conditions they didn’t anticipate. In many areas there were fewer cheap foreclosures to choose from, and lots of talk about multiple offers. It might have driven some back to the sidelines,” said John Walsh, MDA DataQuick president.

Sales have fallen between July and August in the past two years and in seven other years back to 1988. Two of those years saw July-August dips greater than this year’s: a drop of 15.2 percent in 1992 and 14.8 percent in 1998.

The median price paid for all new and resale houses and condos last month fell to $360,000, down from $395,000 in July. It was the second-highest for any month since last October, when it was $375,000 and was 24.1 percent higher than the current cycle’s low of $290,000 in March this year, but it was 45.9 percent below the July 2007 peak median of $665,000.

The median’s drop was mainly the result of a shift toward a higher percentage of sales occurring in lower-cost inland areas. Although sales fell across the region and home price spectrum, some costlier areas saw the biggest declines. Sales fell the most – 21.1 percent – in Santa Clara County. Its share of total Bay Area sales fell to 23.1 percent in August, down from 25.1 percent in July.

Across the Bay Area, home sales above $500,000 represented 34 percent of all sales in August, down from 36.2 percent in July and down from 44.7 percent in August 2008. Sales of homes above $800,000 fell to 12.2 percent of sales in August, down from 14.1 percent in July and 18.9 percent a year earlier.

There was a corresponding decline in the mortgages used to purchase high-end homes. Loans above $417,000 – formerly defined as “jumbo” loans – accounted for 27.8 percent of all Bay Area purchase loans last month. That was down from 30.2 percent in July and 31.9 percent a year earlier. Before the August 2007 credit crunch, loans over $417,000 were used to finance more than 60 percent of Bay Area sales.

Another fuel source for high-end sales – adjustable-rate mortgages (“ARMs”) – continues to be used far less than what’s been normal historically. In August, 6.6 percent of all purchase loans were ARMs, the same as in July and down from 20.8 percent a year earlier. ARMs fell to a record low of 3.0 percent in January this year. ARMs had averaged 61 percent of Bay Area purchase loans this decade up until when the credit crunch hit two years ago.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $1,585 last month, down from $1,739 the previous month, and down from $2,256 a year ago. Adjusted for inflation, current payments are 39.7 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 55.4 percent below the current cycle's peak in July 2007.

Foreclosure resales made up 32.5 percent of total August resales, up from 31.2 percent in July but down from 36.0 percent a year ago. The August percentage was higher than July’s, despite fewer foreclosed homes selling last month.

So, if you have been following the MLS, you would be very frustrated with the lack of foreclosure deals out there. The strange thing is, there are TONS of foreclosures on our listing site that are NOT on the MLS! Why are lenders holding "phantom inventory" back? And what are YOU doing to get in front of those deals not on the MLS… before your competition does?

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The median sale price of a Southern California home edged up for the fourth month in a row, with 21,502 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in August. That was down 10.8 percent from 24,104 in July, but up 11.0 percent from 19,366 in August 2008, according to MDA DataQuick of San Diego.

Last month was the 14th in a row with a year-over-year sales increase. The decline from July to August was unusual, given an increase is normal for the season, and most likely caused by the drop in foreclosure resales inventory.

Foreclosure resales accounted for 38.8 percent of August’s resales activity, down from 40.7 percent in July and down from 45.5 percent in August 2008. In February this year it peaked at 56.7 percent. Most of the relative decline is due to an increase in non-foreclosure resales.

The median price paid for a Southland home was $275,000 last month, up 2.6 percent from $268,000 in July, and down 16.7 percent from $330,000 in August 2008. The month-to-month increase was the fourth in a row after the median fell to a more-than 7-year low of $247,000 in April. The median peaked at $505,000 in mid 2007.

Changes in the median do not necessarily correspond to changes in home values in the current, atypical sales environment. Adjusting for shifts in market mix, it now appears that over the past two years homes in older, more costly neighborhoods have come down in value by about half as much as homes in newer, more affordable neighborhoods. Prices also fell sharply in some lower-cost, older communities where the use of risky subprime loans was high, triggering relatively high foreclosure rates.

The median price is likely to rise as “jumbo” and adjustable-rate (ARM) financing become more available again, given that those loan types fuel sales of homes priced above the Southland’s mid-point.

Loans above $417,000 – formerly the definition of a jumbo loan – accounted for nearly 40 percent of all home purchases before the credit crunch hit two years ago. Last month they accounted for 15.6 percent, up from a low of 9.3 percent in January 2009.

Adjustable-rate mortgages, which have accounted for 39.8 percent of all home purchase loans over the last 20 years, accounted for 3.9 percent last month, up from 1.9 percent in April this year.

At the same time, a common form of financing used by first-time home buyers in more affordable neighborhoods remains near record levels. Government-insured, FHA mortgages made up 37.4 percent of all purchase loans in August, up from 37.0 percent in July and 27.1 percent in August last year.

The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,207 last month, up from $1,184 for July, and down from $1,642 for August a year ago. Adjusted for inflation, current payments were 45.5 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They were 55.4 percent below the current cycle’s peak in July 2007.