Bay Area home sales continue to drop, prices reach new peak

June 21, 2006

La Jolla, CA.----Sales of Bay Area homes declined for the fourteenth month in a row in May as prices continued to slowly edge up, a real estate information service reported.

A total of 9,064 new and resale houses and condos were sold in the nine-county region last month. That was up 8.4 percent from 8,358 for April, and down 19.8 percent from 11,308 for May last year, according to DataQuick Information Systems.

Last month was the slowest May since 2001 when 7,864 homes were sold. The strongest months of May since 1988 were May 2004 with 12,028 sales, and last year. May sales hit bottom in 1995 with 5,779.

"This is a market that is rebalancing itself after several boom years. What we're seeing is stable core demand, and a decline in speculative and discretionary buying. These trends should continue through the summer buying season. There is uncertainty about the market after that, tied to broader economic trends," said Marshall Prentice, DataQuick president.

The median price paid for a Bay Area home was $631,000 last month, another record. That was up 0.5 percent from April's $628,000, and up 6.1 percent from $595,000 for May a year ago. Last month's year-over-year increase was the lowest since May 2003 when the $427,000 median was up 3.4 percent.

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 $3,091 in May. That was up from $3,048 in April, and up from $2,646 for May a year ago. Adjusted for inflation, mortgage payments are 22 percent higher than they were at the peak of the prior cycle sixteen years ago.

Indicators of market distress are still largely absent. The use of adjustable-rate mortgages has decreased the last five months. Foreclosure rates are coming up from last year's low point, but are still below normal levels. Down payment sizes are stable and there have been no significant shifts in market mix, DataQuick reported.

All Homes	No Sold May-05	No Sold May-06	Pct. Chg	Median May-05	Median May-06	Pct. Chg
Alameda	2,155	1,881	-12.7%	$573K	$598K	4.4%
Contra Costa	2,229	1,772	-20.5%	$539K	$584K	8.3%
Marin	429	340	-20.7%	$820K	$796K	-2.9%
Napa	182	165	-9.3%	$552K	$530K	-4.0%
San Francisco	698	626	-10.3%	$765K	$767K	0.3%
San Mateo	805	676	-16.0%	$726K	$752K	3.6%
Santa Clara	2,838	2,241	-21.0%	$628K	$682K	8.6%
Solano	1,098	720	-34.4%	$429K	$472K	10.0%
Sonoma	874	643	-26.4%	$533K	$532K	-0.2%
Bay Area	11,308	9,064	-19.8%	$595K	$631K	6.1%

Source: DataQuick Information Systems, www.DQNews.com

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