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REALTOR®: Foreclosure re-sales do not yet have market-wide effect on prices

Monday, September 24, 2007

Foreclosure re-sales are not yet having a market-wide effect on prices, at least not in certain parts of the Bay Area, according to a real estate information service. DataQuick reported, although some local markets in the Inland Empire and Central Valley are showing early signs of downward pressure of prices, the overall picture of real estate in the Bay Area continues to look healthy. And real estate market analysts and officials appear to agree.

DataQuick Information Systems reports the median price paid for a Bay Area home was $655,000 in August. That was down 1.5 percent from the June and July peak of $665,000, but still up 4.0 percent from $630,000 for August a year ago. The median was down in Solano, Sonoma and Napa counties and flat or up in the other counties. The median price for a San Mateo County home increased 4.4 percent, from $755,000 in August 2006 to $788,000.

Statewide last month, a total of 33,429 new and resale houses and condos were sold, down 5 percent from 35,185 for July, and down 34.5 percent from 51,054 for August 2006. August sales from 1988 to 2007 range from the 29,764 in 1992 to 73,285 in 2005. The average is 50,524.

The median price paid for a California home last month was $465,000, down 2.7 percent from $478,000 for the month before, and down 1.1 percent from $470,000 for August a year ago. The median peaked last March/April/May at $484,000. The July to August drop in median may in large part be due to slower 'jumbo' mortgage financing, which would bring down the number of high-end home sales.

"Homes in the Bay Area are more expensive than elsewhere and most of them are financed with 'jumbo' mortgages. The turbulence in the mortgage markets has made it more difficult to get this type of financing. The question is: does this pull the plug on some market activity, or does it just slow things down? We won't know the answer for a few months," said Marshall Prentice, DataQuick president.

Sales of homes are down compared to last year due to buyer hesitancy created by the rise in foreclosures created by the subprime lending problem and tighter lending practices. The reality, however, is “things have not changed,” according to San Mateo County Association of Realtors® President Geoffrey Craighead. Craighead noted, while lenders are more careful in issuing loans to homebuyers, good loans are still available.

“It is still a good time for serious homebuyers who look to housing as a long-term investment because homes will continue to appreciate in area like San Mateo County, because of the amenities the county offers, its strong economy, plus land here is in short suppy,” said Craighead.

Craighead here are good mortgage loans available to buyers and interest rates continue to be low. “Nothing has changed. You can still get a good mortgage loan, but as always, you have to have a good, steady job, you have to have some money for a down payment and show the lender that you can make it work.”

DataQuick reported the typical mortgage payment that home buyers committed themselves to paying in August was $2,251. That was down from $2,316 in July, and up from $2,249 for August a year ago. Adjusted for inflation, mortgage payments are 6.7 percent above the spring 1989 peak of the prior real estate cycle. They are 7.9 percent below the current cycle's peak in June last year.

Financing with adjustable-rate mortgages and multiple mortgages has declined significantly. Down payment sizes are stable, flipping rates and non-owner occupied buying activity is flat, DataQuick reported.

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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