San Francisco Bay Area home sales up

Source : Business Times - 21 Aug 2008

7,586, or 2% more, units sold in July, recording first sales gain since Jan 2005

San Francisco Bay Area home sales rose in July for the first time since 2005 and the median price fell to the lowest in more than three years as buyers bought discounted properties in foreclosure.

Cheap buys: One-third of the Bay Area’s resales in July were homes fresh off foreclosure. Buyers are attracted by foreclosure sales to inland areas where home prices fell after rapid appreciation during the housing boom

Sales increased 2.2 per cent last month from a year earlier, San Diego-based MDA DataQuick, a property research firm, said in a report on Monday. A total of 7,586 houses and condominiums sold in July in nine Bay Area counties.

The median fell a record 29.3 per cent to US$470,000, the lowest since March 2005.

‘We know one-third of the Bay Area’s resales in July were homes fresh off foreclosure,’ said John Walsh, MDA DataQuick president. ‘Who knows how many more involved a desperate seller and a lender who accepted a short sale?’

Foreclosure sales are attracting buyers to inland areas where home prices declined after rapid appreciation during the five year housing boom. Those transactions accounted for 33 per cent of total Bay Area sales last month, up from 29.9 per cent in June and from 4.2 per cent a year earlier.

Eleven ZIP codes in Solano and Contra Costa counties had foreclosure sales at least double the amount in July 2007, according to MDA DataQuick.

Falling prices enabled 48 per cent of households to afford an entry-level home in the state in the second quarter, compared with 24 per cent a year earlier, the California Association of Realtors said in a separate report on Monday. The minimum qualifying income was US$62,870, compared with US$101,440 a year earlier, the Realtors said.

The year-over-year sales gain was the first since January 2005, MDA DataQuick said. Transactions increased 5.7 per cent in July from June. Southern California home sales rose 14 per cent to the highest level since March 2007.

Sales are slower in more expensive coastal areas such as San Francisco, Marin and San Mateo counties, MDA DataQuick said.

Potential buyers are waiting for mortgage terms to become less strict and sellers are reluctant to put their homes on the market as prices fall, Mr Walsh said.

Purchases made with jumbo loans, those over US$417,000, fell by half in July from a year earlier and help explain why the region’s median price declined the most since MDA DataQuick, a unit of Vancouver-based MacDonald Dettwiler and Associates, began statistics in 1988, the company said.

The Bay Area median hasn’t been lower since March 2005, when it was US$469,500.

Prices dropped in all nine counties, led by a 42 per cent decline in Contra Costa. Prices decreased 34 per cent in Solano, 30 per cent in Sonoma, 28 per cent in Napa, 27 per cent in Alameda, 16 per cent in Santa Clara, 16 per cent in San Mateo, 13 per cent in Marin and 6 per cent in San Francisco, according to MDA DataQuick.

Sales increased 47 per cent in Napa, 45 per cent in Solano, 30 per cent in Contra Costa and 8 per cent in San Francisco. They fell 13 per cent in Santa Clara, 11 per cent in San Mateo, 10 per cent in Marin and 9 per cent in Alameda. Sales were unchanged in Sonoma, MDA DataQuick said.

The typical monthly mortgage payment was US$2,218 in July, down from US$2,282 in June and US$3,222 a year earlier.

Adjusted for inflation, current payments are 15.1 per cent below payments in the spring of 1989, the peak of the prior real estate cycle, and 36.1 per cent below payments in June 2006, the current cycle’s peak, MDA DataQuick said. — Bloomberg