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REALTOR®: Price Picture Mixed in Bay Area

Monday, December 24, 2007

Sluggish demand kept sales at a two-decade low for the third straight month in the Bay Area, though prices continued to hold up in the region’s core markets, a real estate information service reported.

A total of 5,127 new and resale houses and condos sold in the Bay Area in November, down 6.5 percent from October sales, and down 36.2 percent from November 2006, DataQuick Information Systems reported. Until last month, the slowest November was in 1990, when 6,015 homes sold. The strongest November, in 2004, saw 11,906 sales. The average for the month is 8,367.

"This fall's sharp decline in jumbo-loan financing continued to weigh heavily on Bay Area home sales, though we do see evidence the problem has stabilized. The percent of all transactions financed with jumbo mortgages increased slightly in November for the first time since the credit crunch hit in August. We expect sales to pick up at least modestly as the price and availability of jumbo loans improves," said Marshall Prentice, DataQuick president.

The median price paid for a Bay Area home was $629,000 last month, down 0.3 percent from $631,000 in October, and up 1.5 percent from $620,000 in November last year.

Prices in the core metro markets close to large job centers or the coast are holding up relatively well, while areas far from the core are experiencing the most price erosion.

“Prices in San Mateo County will be able to hold their own because the demand for housing here is greater than the supply, since two-thirds of the land is devoted to open space. This is also why it is expensive to live in San Mateo County,” said San Mateo County Association of REALTORS® 2007 President Geoffrey Craighead.

While overall the San Mateo County housing market saw sales drop 25.7 percent in November 2007, compared with the prior year, the median price for all homes – single family and condominiums/townhouses – continued its movement upward, though slightly, to $780,000, up 4.1 percent from the November 2006 median home price. Median home prices in the counties of Marin, San Francisco and Santa Clara counties also increased.

In some cases price declines appear to be enticing more sales, especially within the new-home market. In Solano County, DataQuick reports new home sales rose nearly 19 percent between October and November. The county's new-home median price is down almost 15 percent on a year-over-year basis and is 22 percent off its peak.

Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, financing with adjustable-rate mortgages and with multiple mortgages have dropped sharply. Down payment sizes and flipping rates are stable, and non-owner occupied buying activity has edged up, DataQuick reported.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $2,964 last month, down from $3,000 the previous month, and up from $2,883 a year ago. Adjusted for inflation, current payments are 13.3 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 10.7 percent below the current cycle's peak in June last year.

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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