Jan 22, 2009 12:17 am US/Pacific
Bay Area Home Prices Down More Than 50% From Peak
SAN FRANCISCO (CBS 5 / AP / BCN) ―
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A sign indicating a reduced price is posted in front of a home for sale in East Palo Alto.
AP
The median home price in the Bay Area fell nearly 44 percent in December from a year earlier as more bargain hunters scooped up foreclosure properties, a real estate tracking firm said Wednesday.
The median home price in the nine-county Bay Area region dropped to $330,000 last month from $587,500 in December 2007, according to DataQuick.
The Bay Area median home price is at the lowest point since March 2000, when it was $320,500, and marks a 50-percent decline since the peak of $665,000 in the summer of 2007. The median marks the price where half the homes sold for more and half sold for less.
But Data Quick said that the number of Bay Area home sales actually increased, even as the average prices continued to fall.
A total of 6,889 houses and condos were sold in December, up 20 percent from November and up 36 percent from December 2007, the real estate research firm said.
The rising sales rates and falling prices are also "telling us something about what's selling and where," said Andrew LePage, a Data Quick analyst.
The increase in sales was driven by foreclosure properties that for the first time accounted for more than half of all resales, while problems securing financing hurt sales of more expensive homes, the firm said.
"It's basically a market where you've got people bailing on home ownership or people who lost their homes," said John Karevoll, another Data Quick analyst.
While home values have declined across the Bay Area, "a big chunk of that decline relates to many more sales occurring in the less expensive inland markets," LePage added.
Most of the Bay Area sales took place in the East Bay counties hit hardest by foreclosures. The median home price fell 50 percent to $252,000 in Contra Costa County, 37 percent to $338,000 in Alameda County and 42 percent to $213,500 in Solano County. By contrast, it dropped 16 percent to $616,500 in San Francisco.
The upper half of the Bay Area housing market won't recover until the market for "jumbo" loans for more than $417,000 recovers.
"It's much harder and more expensive today to get a larger home loan," LePage explained. "There just aren't a lot of people on Wall Street right now who are willing to buy these jumbo loans."
Such loans used to account for more than 60 percent of the region's real estate financing, but only made up 22 percent of loans last month.
"It's very difficult if not impossible to predict what's going to happen," Karevoll said. "It's hard to project when the operating instructions for the market are no longer valid."
Homebuyers' typical mortgage payments are down too, data showed. One year ago new homeowners committed to an average payment of $2,850, compared with $1,471 last month.
"Probably a lot of people buying are those who sat out during the frenzied stage of the market a few years back," LePage concluded. "Now they're buying at a nice discount."
(© CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press and Bay City News contributed to this report.)
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