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REALTOR®: Realtor officials attribute drop in July sales to tighter lending standards, negative news about foreclosures and subprime situation

Monday, August 27, 2007

The California Association of REALTORS® (C.A.R.) reported this week that home sales decreased 22.7 percent in July in California from the 453,980 sales pace recorded in July 2006, while the median price of an existing home increased 3.2 percent.

“The decline in sales we experienced in July continues to be driven by both tighter underwriting standards since the start of the year and the adverse psychological impact of news and information regarding increases in foreclosures and the subprime situation,” said C.A.R. President Colleen Badagliacco. “Although the median price posted an increase statewide, there is a disparity between the lower-priced or entry-level markets, where prices generally are soft at best and sales have declined sharply, and some higher priced markets that continue to experience price appreciation along with somewhat smaller decreases in sales.”

The median price of an existing, single-family detached home in California during July 2007 was $586,030, a 3.2 percent increase over the revised $567,860 median for July 2006. The July 2007 median price decreased 1.4 percent compared with June’s revised $594,280 median price.

“With credit drying up in recent weeks, we expect further weakness in sales over the next few months,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “It is too early to say how long the current credit crunch will continue, but we are hopeful that we will avoid a prolonged credit crisis that might cause sales to decline over a longer period of time.

“It is important to note that decline in sales is not driven by weakening economic conditions,” she said. “Rather, the statewide and national economies continue to move forward, with no recession on the horizon at this point in time.”

San Mateo County Association of REALTORS® (SAMCAR) President Geoffrey Craighead said compared to other counties in the state, the economy in San Mateo County continues to be healthy and the housing market in no danger of a downslide.

“There’s a tremendous amount of demand for homes in the area. We are still seeing demand for homes priced under $1 million, as long as the home is well-priced,” commented Craighead. “We’re still seeing multiple offers, but price is the key. Homes on the high-end, over $3 million, still seem to be selling pretty easily.”

The recent lowering of the mortgage interest rate is an indication that things will improve, especially for home buyers who maintain good credit, according to Craighead.

“The credit crunch is a total over reaction. Home buyers with solid credit and money for a down payment are now better positioned than they were a few weeks ago, and despite the meltdown in non-traditional mortgages, many lenders still offer good loans,” he said.
Here are some highlights of the C.A.R. report:

* C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in July 2007 was 10.7 months, compared with 7.3 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

* Thirty-year fixed-mortgage interest rates averaged 6.7 percent during July 2007, compared with 6.76 percent in July 2006, according to Freddie Mac. Adjustable-mortgage interest rates averaged 5.71 percent in July 2007 compared with 5.79 percent in July 2006.

* The median number of days it took to sell a single-family home was 51.8 days in July 2007, compared with 47.7 days (revised) for the same period a year ago.

* Statewide, the 10 cities and communities with the highest median home prices in California during July 2007 were: Los Altos, $1,783,000; Manhattan Beach, $1,628,500; Burlingame, $1,500,000; Newport Beach, $1,450,000; Saratoga, $1,414,000; Palos Verdes Estates, $1,386,500; Lafayette, $1,274,500; Orinda, $1,242,500; Calabasas, $1,220,000; Rancho Palos Verdes, 1,135,000.

* Statewide, the 10 cities and communities with the greatest median home price increases in July 2007 compared with the same period a year ago were: Novato, 19 percent; Culver City, 18 percent; Ridgecrest, 14.2 percent; Glendale, 12.4 percent; Manhattan Beach, 11.7 percent; San Marcos, 11.2 percent; Redondo Beach, 11 percent; Yorba Linda, 10.3 percent; Los Angeles, 9.9 percent; Saratoga, 9.6 percent.

The San Mateo County Association of REALTORS® (SAMCAR) is a professional trade organization representing over 3,800 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula. SAMCAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in San Mateo County.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Julie Ziemelis, Director of Public Affairs, e-mail , or phone (650) 696-8214.

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