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Worst of market corrections may be over as existing-home sales and inventory ease

Friday, November 3, 2006

Existing-home sales eased last month, as did the number of homes available for sale – indicating the housing market is stabilizing, according to the National Association of Realtors®. The San Mateo County Association of Realtors® (SAMCAR) reports that the market continues to be strong in the Peninsula area, particularly for homes priced under a million dollars.

Nationwide, total existing-home sales – including single-family, townhomes, condominiums and co-ops – dipped 1.9 percent to a seasonally adjusted annual rate of 6.18 million units in September from a level of 6.30 million in August, and were 14.2 percent below the 7.20 million-unit pace in September 2005, which was the third strongest month on record.

David Lereah, NAR’s chief economist, said stabilizing sales should build confidence in the housing market.
“When consumers recognize that home sales are stabilizing, we’ll see the buyers who’ve been on the sidelines get back into the market, and sales will be at more normal levels in the wake of the unsustainable boom that we saw last year,” said Lereah.

NAR President Thomas M. Stevens said the industry is encouraged that the number of homes on the market is starting to decline. Total housing inventory levels fell 2.4 percent at the end of September to 3.75 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace.

“It appears we have passed a cyclical peak in terms of the number of homes on the market,” said Stevens. “A stable sales pace is expected to draw down the number of listings to a supply balance that will support positive price growth within a few months. Taking the long view is always the best way to approach housing decisions, and right now, buyers are in a very favorable market.”

While DataQuick Information Systems recently reported a total of 639 of new and resale houses and condos were sold in San Mateo County last month, down 22 percent from 819 for September last year, according to San Mateo County Association of Realtors® (SAMCAR) Board Director David Zigal, “There has never really been a slowdown in the market for homes priced under the one million dollar range in the Peninsula. Homes in this range are still receiving multiple offers. The market is pretty strong for homes that are under a million.”

Zigal, who is a longtime Realtor in the San Mateo County area and the California Association of Realtors® (C.A.R.) Region 25 Chair, said he is having a difficult time finding homes in that price range for his clients. “I have clients looking for homes under a million dollars and we can’t get into a listing fast enough; there are always multiple offers. People are not waiting. They are buying in this price range.”

“There is no better time to buy real estate in the Bay Area,” said Zigal. “As long as you intend to hold on to the property long-term, you’re not going to wrong. If you intend to hang on just for the short-term, you’re going to have a problem. … Buying a home long-term is like buying a new dress. You buy a new dress and wear it because you like it, because it feels good. You don’t worry that it’s going to depreciate.”

The market is also good for sellers if they can price their home realistically, according to the SAMCAR director.
“Sellers need to realize that they can’t compete with what happened with prices a year ago. You have to look at the market realistically today,” he said.

With the market in transition, the national median existing-home price for all housing types was $220,000 in September, which is 2.2 percent below September 2005 when the median was $225,000.

DataQuick figures show the September 2006 median home price in San Mateo County was $745,000, down 0.9 percent from the same period last year.

Regionally, existing-home sales in the South rose 0.4 percent in September, but were 9.0 percent below September 2005. The median price in the South was $184,000, down 1.6 percent from a year ago. Existing-home sales in the Midwest eased 2.8 percent in September and were 13.7 percent lower than a year ago. The median price in the Midwest was $169,000, which is 2.3 percent below September 2005. In the West, existing-home sales declined 3.1 percent in September, and were 23.8 percent lower than a year earlier. The median price in the West was $332,000, down 4.3 percent from September 2005. Existing-home sales in the Northeast fell 3.7 percent in September, and were 13.4 percent below September 2005. The median existing-home price in the Northeast was $259,000, down 5.1 percent from a year earlier.

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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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