Home sellers and realtors still in denial?
Original post made by Homeowner on Feb 14, 2008
We are going to retrace a lot, if not all, of our unhealthy run-up in house prices.
Bay Area home sales lowest for any month in two decades
February 14, 2008
La Jolla, CA.----Bay Area home sales plunged below 4,000 transactions for the first time in over 20 years last month as the market remained hamstrung by the credit crunch and uncertainty among buyers, sellers and lenders. Price declines steepened, especially in inland markets hit hard by foreclosures, a real estate information service reported.
A total of 3,586 new and resale houses and condos sold in the Bay Area in January. That was down 29.2 percent from 5,065 in December, and down 41.9 percent from 6,168 in January 2007, DataQuick Information Systems reported.
Last month's sales were the lowest for any month in DataQuick's statistics, which go back to 1988. Sales have decreased on a year-over-year basis for 36 consecutive months. Prior to last month the slowest January was in 1995, when 4,326 homes sold. The strongest January, in 2005, posted 8,298 sales. The average for the month is 6,319 sales.
The median price paid for a Bay Area home was $550,000 last month, down 6.4 percent from $587,500 in December, and down 8.5 percent from $601,000 in January last year. Last month's median was 17.3 percent lower than the peak $665,000 median, last reached in July, and was the lowest since February 2005, when the median was $549,000.
"There will be plenty of debate over the meaning of these extraordinarily low sales and the bigger drop in the median price. Some will insist demand has dried up in the absence of loose lending standards, with no turnaround in sight. Others will argue it's just a lull caused by temporary market turbulence, with brighter days just ahead," said Marshall Prentice, DataQuick president.
"What's clear to us," he continued, "is the credit crunch that struck in August had a sharp and immediate impact on Bay Area sales and median prices. The 'jumbo' loans the Bay Area relies on so dearly got pricier and harder to get, and their use has plummeted. The statistical picture could change quickly, though, if the government's effort to raise the conforming loan limit reignites $500,000-plus home sales. We could see significant gains in both our transaction totals and median prices."
Last month the percentage of Bay Area homes purchased with jumbo mortgages, or loans over $417,000, fell to 34.5 percent, down from 39.6 percent in December and down from about 63 percent before the credit crunch hit six months ago.
While last month's lower median price does reflect depreciation in the market ? especially in inland areas ? it also reflects the steep decline in sales of more expensive homes requiring jumbo financing. Purchases with jumbo loans have tumbled about 74 percent from a year ago, while those financed with conforming loans ? up to $417,000 ? have declined 29 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. Due to late data availability, the December 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 $2,503 last month, down from $2,744 the previous month, and down from $2,804 a year ago. Adjusted for inflation, current payments are 4.9 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 24.8 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 or with multiple mortgages has dropped sharply. Down payment sizes and flipping rates are stable, non-owner occupied buying activity is edging up, DataQuick reported.
Source: DataQuick Information Systems, www.DQNews.com