Bay Area home sales climb above last year; median price falls hard

August 19, 2008

La Jolla, CA.----Bay Area home sales eked out their first year-over- year gain since early 2005 last month as buyers responded to price cuts and snapped up more inland foreclosures. The median sales price dove to a 53- month low, a real estate information service reported.

A total of 7,586 new and resale houses and condos sold across the nine- county Bay Area in July. That was up 5.7 percent from 7,178 in June and up 2.2 percent from 7,423 in July 2007, according to San Diego-based MDA DataQuick.

July sales were the highest for any month since June 2007 and marked the first annual sales gain for any month since January 2005. However, last month's sales still fell 22 percent short of the average July sales total since 1988, when MDA DataQuick's statistics begin, and were the second- lowest for a July since 1995.

Sales of distressed properties played a major role in most areas logging annual sales gains last month.

Foreclosure resales -- homes sold in July that had been foreclosed on in the prior 12 months -- made up 33 percent of all resales. That was up from 29.9 percent in June and 4.2 percent in July 2007. Foreclosure resales ranged from 4.6 percent of the resale market in San Francisco to 65.9 percent in Solano County.

In Solano and Contra Costa counties, where deeply discounted foreclosures are most common, 11 zip codes posted sales of existing houses that were at least twice as high as in July 2007.

"So much of today's market is driven by distress. Unless interpreted in that context, the stats give a rather distorted view of the overall market. We know one-third of the Bay Area's resales in July were homes fresh off foreclosure. Who knows how many more involved a desperate seller and a lender who accepted a short sale," said John Walsh, MDA DataQuick president.

"Meanwhile, many would-be sellers wait for a healthier market and many would-be buyers, especially those eyeing costlier coastal homes, wait for signs of a market bottom or for the return of more favorable financing. A clearer picture of the entire housing market will emerge once more of these foreclosures burn off and more lenders, sellers and buyers get off the sidelines and back into the housing game."

Since the credit crunch hit last August, making "jumbo" mortgages over $417,000 more expensive and harder to obtain, the percent of Bay Area homes financed with jumbo loans has plummeted. Last month jumbos made up 32.3 percent of all home purchase loans, down from 63.1 percent in July 2007.

In addition to undermining sales, the dropoff in jumbo use helps explain why the median price has fallen so sharply. With fewer high-end coastal homes selling, the pool of sales from which a median can be derived skews toward the lower-cost homes that are selling best.

This fundamental shift in the types of homes selling, coupled with depreciation, especially inland, pushed the Bay Area's median sales price down to $470,000 in July. That was 3.1 percent lower than $485,000 in June this year and 29.3 percent lower than the peak $665,000 median reached in July and June of 2007.

The median has not been lower than July's since March 2005, when it was $469,500. The 29.3 percent year-over-year drop in the July median is a record in MDA DataQuick's statistics.

MDA DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $2,218 last month, down from $2,282 the previous month, and down from $3,222 a year ago. Adjusted for inflation, current payments are 15.1 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 36.1 percent below the current cycle's peak in June 2006.

Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, financing with adjustable-rate mortgages is at a six-year low. Down payment sizes and flipping rates are stable, non-owner occupied buying activity is flat, DataQuick reported.

	Sales Volume			Median Price
All homes	Jul-07	Jul-08	%Chng	Jul-07	Jul-08	%Chng
Alameda	1,577	1,428	-9.4%	$605,000	$440,000	-27.30%
Contra Costa	1,328	1,730	30.3%	$599,000	$350,000	-41.60%
Marin	306	277	-9.5%	$887,500	$770,000	-13.20%
Napa	85	125	47.1%	$614,500	$440,000	-28.40%
Santa Clara	1,910	1,660	-13.1%	$700,000	$585,500	-16.40%
San Francisco	564	609	8.0%	$799,000	$749,000	-6.3%
San Mateo	728	648	-11.0%	$800,000	$670,000	-16.30%
Solano	408	592	45.1%	$415,000	$275,000	-33.70%
Sonoma	517	517	0.0%	$520,000	$362,500	-30.30%
Bay Area	7,423	7,586	2.2%	$665,000	$470,000	-29.30%