Bay Area Home Sales Up, Bay Area Median Price Down
October 30, 2008
September was a very interesting month in terms of the real estate market in the Bay Area. The month of September saw Bay Area home sales fly above the record-low levels of a year ago, marking the largest gain in over six years. However, the median sale price headed in the opposite direction, diving to $400,000. That is nearly 40 percent below its summer 2007 peak, according to San Diego-based DataQuick, a real estate information service.
Let’s discuss both scenarios and possible reasons behind their ascent and descent. Last month’s 45 percent year-over-year sales gain was the highest for any month since April 2002. At that time, sales catapulted 49 percent. However, the numbers from last month are somewhat misleading. The jump is partly the result of the exceptionally weak activity in September 2007, a record low for that month in DataQuick’s statistics that tracked data back to 1988. A number of factors contributed to the low numbers from a year ago. Sales plunged after a credit crunch struck in August 2007, making mortgages harder to obtain. In addition, entry-level sales were already suffering from the subprime meltdown earlier in 2007.
The second scenario is the continued decline in the median price of Bay Area homes. For all new and resale houses and condos sold in the Bay Area, the median price was $400,000. This is down 10.5 percent from $447,000 in August and down a record 36.0 percent from $625,000 in September 2007, according to DataQuick. The median price has plummeted for several reasons. One primary factor is the more stringent requirements involved with qualifying for loans. In particular, jumbo loans that typically finance larger, more expensive homes have been impacted the greatest. Another factor is the rise in foreclosures and short sale transactions. Nearly 42 percent of all existing homes sold across the Bay Area last month had been foreclosed on at some point in the prior 12 months, up from 36.1 percent in August and 6.9 percent a year ago. A final factor is the region wide price depreciation.
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