Bay Area home sales continued their downward slide in May
Author: Skia
Category: Real Estate
Bay Area home sales continued their downward slide in May, with fewer properties changing hands and the mix of sales tilting toward higher-priced houses.
In the nine-county area, 5,487 existing single-family homes were sold in May, down 17.4 percent from May 2006, according to DataQuick Information Systems. The median price rose 5.9 percent to $720,000.
Looking at both new and resale homes and condos, sales volume was down 18.7 percent to 8,080 transactions, while the median price was up 3.4 percent to $660,000.
“Sales are really low; you’d have to set the clock back 12 years to find another May with lower sales,” said Andrew LePage, an analyst with DataQuick.
Median prices for existing homes were up in seven of the nine counties, ranging from a 1.6 percent increase to $640,000 in Alameda to a 9.1 percent increase to a $900,000 median in San Francisco. The median price slid in Solano and Sonoma counties.
The rising median does not mean that home values are on the upswing. Instead, it shows that the proportion of high-end sales is increasing, while comparatively fewer lower-cost houses are selling.
“Some of the most affordable neighborhoods are seeing the biggest declines in sales,” LePage said. Sales activity in parts of Richmond, Suisan City, Antioch, Pittsburg, parts of Oakland, Vallejo, Santa Rosa and Dixon are down by 45 to 65 percent compared with a year ago, he said.
At the same time, sales volume is up significantly compared with last year in higher-priced areas, such as Belvedere, Tiburon, Walnut Creek, Lafayette, Cupertino, Mountain View and Sunnyvale.
“If you were to correct for (the tilt in market mix), we think the Bay Area median would be flat or slightly negative,” LePage said.
Rising mortgage rates “could get some people off the fence and into the market,” as they realize that waiting for house prices to drop could actually cost them money, he said.
Rates on 30-year mortgages rose for a fifth straight week to 6.74 percent, the highest in 11 months, according to a nationwide survey done each week by mortgage giant Freddie Mac. Rates on 15-year fixed and adjustable-rate mortgages were also up.
Lower-end sales have been hurt because lenders are much stricter in the aftermath of the subprime loan crisis in which people with poor credit have started defaulting on their loans.
Realtor Saraya Motley of Red Oak Realty is selling four condos in a building near Children’s Hospital in Oakland. The seller has cut between $50,000 and $60,000 off the price of each unit, which now range from $299,000 to $369,000. The lower prices generated lots of interest and one accepted offer, but two other offers fell through because the buyers could not qualify for a loan, she said.
Tighter lending standards “are really affecting the bottom 20 percent of the market right now,” Motley said. “The buyers don’t qualify because the whole bottom of the market really dropped out with the subprime issue.”
Even homes that are near the Bay Area median are taking longer to sell.
Nicole diGiorgio and her husband are selling a storybook Tudor in Martinez’s LaSalle Heights area replete with drool-worthy period details. They want to move to Sacramento for the lower cost of living and to be closer to family. So they poured money and energy into getting the house in tip-top condition: redoing the floors, reconditioning the walls, landscaping the yards. They put their two dogs in a kennel and kept a tight rein on their toddler to make sure everything stayed in pristine condition.
They put the house on the market on April 15 — and waited. Two months later, they’re still waiting.
“We’re trying to do everything we can to tip the scale in our favor,” diGiorgio said. “I asked my agent, what can we do to get people in here — hire a sign waver? have a raffle?” Last week, they dropped the price to $649,000, a $26,000 cut.
“People come through the house and absolutely fall in love with it,” diGiorgio said. “Then the same story comes up: They’ve got a house to sell, or they can’t afford this price bracket, or they’re not sure they’re ready to buy a new home. I can’t help but think it’s all very fear-based.”
She wonders why potential buyers don’t look at a longer time horizon. “If people let common sense prevail, they’ll understand that a house is a long-term investment,” diGiorgio said. “Realistically, most home purchases in the Bay Area, if well-researched, don’t carry much risk when you are in it for the long haul. Home buyers are waiting for the bottom of the market without realizing that the bottom is only temporary.”
Other reports that track home values show Bay Area price appreciation as stagnant.
The Office of Federal Housing Enterprise Oversight, the regulator for mortgage titans Fannie Mae and Freddie Mac, produces a quarterly report on home-price changes for mortgages guaranteed or owned by Fannie and Freddie. Those mortgages must conform to the agencies’ maximum of $417,000, but they include higher-priced homes that have multiple mortgages or large owner equity. The report is based on repeat transactions for the same houses, so it is not skewed by market-mix changes.
Its report for the first quarter of this year showed prices barely inching up in some Bay Area regions and declining in others.
Prices in the San Francisco-San Mateo-Redwood City area rose 1.3 percent compared with the first quarter of 2006, according to the oversight agency. In the San Jose-Sunnyvale-Santa Clara area, they rose 2.3 percent from last year. In Oakland-Fremont-Hayward, prices were down 0.9 percent for the first quarter, while in Vallejo-Fairfield they were down 1.8 percent.
“Price growth in the Bay Area seems to be lagging inflation significantly,” said Andrew Leventis, senior economist for the agency.
California also fared poorly with annual appreciation of 1.2 percent, compared with the national average of 4.3 percent. The state had the 46th-lowest rate of appreciation in the country.
“The Bay Area, like all of California, has seen a tremendous deceleration over the past year,” Leventis said.
Just a year ago, the Bay Area regions enjoyed double-digit price appreciation, according to federal data. Between the first quarters of 2005 and 2006, prices rose 14.8 percent in the San Francisco area, 17.6 percent in the San Jose area, 18.6 percent in the Oakland region, and 17.8 percent in the Vallejo area, Leventis said.
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