Bay Area home prices decline, sales slow

October 17, 2006

La Jolla, CA.----Bay Area home prices fell on a year-over-year basis for the first time in more than four years last month. Sales were at their lowest level in five years, a real estate information service reported.

The median price paid for a home in the nine-county Bay Area was $611,000 in September. That was down 1.5 percent from $620,000 for the month before, and down 0.8 percent from $616,000 for September last year, according to DataQuick Information Systems.

Because of a shift in purchase patterns, a decline from August to September is normal for the season. The year-over-year decline was the first since March 2002 when the $381,000 median dropped 1.3 percent from $386,000 a year earlier. Last month's median was in part tugged down by increased sales of lower-cost condo conversions in the East Bay.

"The last time prices dropped in the Bay Area was after the dotcom bust. There were year-over-year declines in the median in the one to three percent range for six months. The turn in the Bay Area's economy was arguably more severe back then. This time around there isn't really any economic distress. It simply looks like the real estate market's momentum last year and earlier this year pushed prices beyond their equilibrium point and the market is reestablishing its balance," said Marshall Prentice, DataQuick president.

A total of 7,907 new and resale houses and condos were sold in the region last month. That was down 13.4 percent from 9,128 for August, and down 29.4 percent from 11,205 for September last year, DataQuick reported.

Sales almost always decline from August to September. Last month's sales were the lowest for any September since 2001 when 7,201 homes were sold. September sales have ranged from 5,507 in 1991 to 12,075 in 2004.

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 $2,915 in September. That was down from $2,966 in August, and up from $2,713 for September a year ago. Adjusted for inflation, mortgage payments are 14 percent higher than they were at the peak of the prior cycle sixteen years ago.

Indicators of market distress are still at a moderate level. The use of adjustable-rate mortgages has decreased the last half year. 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 Sep-05	No Sold Sep-06	Pct. Chg	Median Sep-05	Median Sep-06	Pct. Chg
Alameda	2,300	1,624	-29.4%	$579K	$575K	-0.7%
Contra Costa	2,312	1,720	-25.6%	$577K	$545K	-5.5%
Marin	448	273	-39.1%	$802K	$813K	1.4%
Napa	189	124	-34.4%	$627K	$615K	-1.9%
San Francisco	600	520	-13.3%	$721K	$746K	3.5%
San Mateo	819	639	-22.0%	$752K	$745K	-0.9%
Santa Clara	2,689	1,867	-30.6%	$646K	$657K	1.7%
Solano	1,030	585	-43.2%	$481K	$470K	-2.3%
Sonoma	818	555	-32.2%	$582K	$537K	-7.7%
Bay Area	11,205	7,907	-29.4%	$616K	$611K	-0.8%

Source: DataQuick Information Systems, www.DQNews.com

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