Real Estate - What’s Really Happening in the Bay Area
Bay Area Real Estate Market Not What The Media Says
The latest figures for the nine San Francisco Bay Area counties showed a 45% increase in sales volume and a 35% drop in median price for September compared to last September. Although the numbers are accurate they are not what they seem to be because, as you know, we are in a very unusual, even historic market.
Yes, home values are down, but not 36%. Many more lower cost homes are selling than last September, but the number of higher priced and luxury homes sales are down substantially. Jumbo loans, loans above $729,500 with a few exceptions this year, are much harder to obtain so many more lower cost homes are selling.
Lower cost homes have dropped dramatically in price mainly because of a large number of foreclosures (bank owned properties, REOs) and bank short sales (banks negotiate with the owners to lower the principal amount of the loan when the owner has a buyer for the home. This keeps the home out of foreclosure which is costly for a lender, but usually not as costly as foreclosing.)
Median price has plummeted for several reasons:
- Region wide price depreciation, which varies by location
- The relatively high cost and qualifying difficulties associated with the jumbo loans used to finance pricer homes
- Significant shift toward a higher portion of sales occurring in lower-cost inland markets
Prices in some coastal areas continue to hold up much better, but sales aren’t shooting up by as much, if at all. Nearly 42% of all existing homes sold across the Bay Area last month had been foreclosed on at some point in the prior 12 months, but only up 6.9% from the previous year.
Sales figures from the Contra Costa Association of Realtors stats that cover 14 communities from Orinda to San Ramon for September compared to last September show:
- Closed sales up 65% for homes & up 10% for condos
- Pending sales up 76% for homes & up 74% for condos/townhouses
There is NOT an excess of homes/condos/townhouses on the market compared to the rate of pending sales over the last 30 days. Active listings are down 17% for homes & 30% for condos/townhouses.
In our local area, home values have held up comparatively well compared to the inland areas with lower priced homes and a lot of new construction over the past five years that have led to numerous foreclosures and short sales along with dramatic drops in prices. Lamorinda, Walnut Creek, Alamo, Danville, San Ramon, Pleasanton, and Fremont home values are holing up relatively well because of the low number of foreclosures and short sales.
If you would like more detailed information, contact Paul (925) 963–4246
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