Bay Area home sales stuck at two-decade low; price picture mixed

December 20, 2007

La Jolla, CA.----The Bay Area's housing market remained in a bit of deep freeze in November, when sluggish demand kept sales at a two-decade low for the third straight month. Prices continued to hold up best in the region's core markets, while some outlying areas posted more double-digit annual declines, a real estate information service reported.

A total of 5,127 new and resale houses and condos sold in the Bay Area in November. That was down 6.5 percent from 5,486 in October, and down 36.2 percent from 8,042 in November 2006, DataQuick Information Systems reported.

Sales have decreased on a year-over-year basis for 34 consecutive months. Last month was the slowest November in DataQuick's statistics, which go back to 1988. Until last month, the slowest November was in 1990, when 6,015 homes sold. The strongest November, in 2004, saw 11,906 sales. The average for the month is 8,367.

"This fall's sharp decline in jumbo-loan financing continued to weigh heavily on Bay Area home sales, though we do see evidence the problem has stabilized. The percent of all transactions financed with jumbo mortgages increased slightly in November for the first time since the credit crunch hit in August. We expect sales to pick up at least modestly as the price and availability of jumbo loans improves," said Marshall Prentice, DataQuick president.

The percent of all Bay Area home purchases financed with jumbo loans, or those exceeding $417,000, rose to 44.1 percent in November. That’s up from 42.6 percent of purchases in October but still well below normal. In the first seven months of this year, before the credit crunch, 62 percent of all Bay Area purchases were jumbo-financed.

The number of homes purchased with conforming loans (up to $417,000) fell 12 percent in November compared with a year ago, while jumbo-loan purchases fell 58 percent from last year.

The median price paid for a Bay Area home was $629,000 last month, down 0.3 percent from $631,000 in October, and up 1.5 percent from $620,000 in November last year. Last month’s median was 5.4 percent lower than the peak median of $665,000 reached last June and July.

Prices in the core metro markets close to large job centers or the coast are holding up relatively well, while areas far from the core are experiencing the most price erosion. Individual counties have seen their median prices decline from peak levels by as little as 2.4 percent in San Francisco and by as much as 21.9 percent in Solano.

In some cases those price declines appear to be stoking more sales, especially within the new-home market. In Solano County, for example, new home sales rose nearly 19 percent between October and November. The county's new-home median price is down almost 15 percent on a year-over-year basis and is 22 percent off its peak.

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. Due to late data availability, the November statistics for Alameda County were extrapolated from the first three weeks of the month.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $2,964 last month, down from $3,000 the previous month, and up from $2,883 a year ago. Adjusted for inflation, current payments are 13.3 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 10.7 percent below the current cycle's peak in June last year.

Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, financing with adjustable-rate mortgages and with multiple mortgages have dropped sharply. Down payment sizes and flipping rates are stable, and non-owner occupied buying activity has edged up, DataQuick reported.

All Homes	Number Sold Nov-06	Number Sold Nov-07	Percent Change	Median November 2006	Median November 2007	Percent Change
Alameda	1,560	985	-36.9%	$581,000	$565,000	-2.8%
Contra Costa	1,627	879	-46.0%	$567,500	$528,500	-6.9%
Marin	285	206	-27.7%	$847,500	$871,000	2.8%
Napa	125	81	-35.2%	$599,000	$562,000	-6.2%
Santa Clara	2,028	1,317	-35.1%	$673,000	$678,000	0.7%
San Francisco	568	479	-15.7%	$760,000	$814,750	7.2%
San Mateo	678	504	-25.7%	$749,000	$780,000	4.1%
Solano	629	313	-50.2%	$441,000	$375,550	-14.8%
Sonoma	542	363	-33.0%	$535,000	$470,000	-12.1%
Bay Area	8,042	5,127	-36.2%	$620,000	$629,000	1.5%

Source: DataQuick Information Systems, www.DQNews.com

Media calls: Andrew LePage (916)456-7157
or John Karevoll (909) 867-9534

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