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FIRST QUARTER
MARKET FLASH 2008 HOUSING PRICES HIT HARD As foreclosures, scarcer
mortgages and general uncertainty continue to pummel the real estate market, Bay
Area median home prices and sales volumes experienced significant declines in
December, according to a report released Thursday. For the nine-county area,
the median home price fell 4.9 percent and sales volume plummeted 43.2 percent
to a record low in December - the 35th consecutive month of decreasing sales.. REAL ESTATE PRICES DROP
The median price for an existing, single-family home in the region was
$620,000 in December, down 4.9 percent from $652,000 a year ago. The resale
median dropped in every county except Santa Clara, where it was up 4.6 percent.
Including condos and new homes, the median was $587,500, also a 4.9
percent drop from a year ago, when it stood at $618,000. It has now fallen 11.7
percent from the peak of $665,000 reached in July. For all Bay Area home sales,
the price drop was the largest year-over-year decline since February 1993. AND NOW A LOOK AT SALES. Even more striking was the
plunge in sales volume. The end of the year is traditionally a slow time for
real estate transactions, but last month stood out as the worst December since
1988. Just 3,049 existing homes changed hands in the nine-county area in
December, down 43.2 percent from 5,366 last year. Including new homes and
condos, a total of 5,065 properties were sold, down 39.5 percent from 8,372 in
December 2006. December was
extraordinarily weak, analysts say. We have lower and lower sales, and a higher
concentration of stressed sales - such as people who were in foreclosure, facing
foreclosure, or lenders trying to sell houses they've taken back. The market
can't seem to gain any traction here. The sense of stalemate is reflected in
ballooning inventories and the length of time some properties languish on the
market.. LENDING WOES CONTINUE The pricey Bay Area
continues to reel from lenders' tighter standards for jumbo mortgages - those
over $417,000. Starting in August, jumbos became more difficult to get and more
expensive. Jumbo mortgages now carry interest rates that average 1.375
percentage points higher than conforming loans. Jumbo scarcity is clearly
reflected in the sales results, which show 1,610 jumbo mortgage purchases in
December, down 65.7 percent from 4,694 in December 2006. Across the Bay Area,
39.6 percent of December sales were jumbos - a significant shift from the first
seven months of the year, before the credit crunch hit, when jumbos averaged 63
percent of Bay Area sales. "There is still a credit crisis out there," said
Marc Savoy, a mortgage broker with SF Pacific Mortgage Consultants in San
Francisco. "The secondary market is in a logjam where these jumbo loans are not
as trade-able as they once were." Jumbos being scarcer and
more expensive also finally put downward pressure on the median price. Even
while sales volume has declined over the past three years, the median has
continued to rise because the mixture of properties sold tilted toward the more
expensive. But now that the mortgage market has put the kibosh on many
higher-end home sales, the median is sliding. BUT THE GOOD NEWS IS… While price declines are
bad news for home sellers, they might encourage more buyers to jump in. For
well-qualified buyers, conforming mortgages under $417,000 carry interest rates
of about 5.625 percent with no points. Affordability has definitely improved for
first-time home buyers. If you have (a) high
credit (score), a good job, can put down a good down payment and can document
everything, it's a good time to get a mortgage loan. If (not), you should stay
as a renter. THE LUXURY HIGH END MARKET HOLDS STEADY.
The Bay Area numbers come
with some caveats, however. The median price is skewed by stronger activity at
the upper end. Real estate in the region is composed of numerous micro-markets,
which vary tremendously. In fact, affluent Bay Area housing markets are holding
their own, while poorer areas are softening significantly. There are dual
realities emerging here. There is one reality for mid- to upper-priced homes up
through the luxury market. In a lot of areas, there are tentative signs of those
markets stabilizing and maybe even inching up both in sales (volume) and price.
For the Bay Area, it’s safe to say that the more expensive the neighborhood, the
more likely it appears to at least temporarily be stabilizing now.
My advice?
Almost as important
as any economic forecast, however, is the reason for buying a property. Housing
is not necessarily past its best day and we have uncertain times ahead it is
true, but if you are buying to live in it for an extended period of time, timing
is not a problem. If you are thinking of it mainly as an investment, you should
think very, very carefully. If you have been on the fence in 2007 about buying
because of market uncertainty, do your due-diligence; keep up with market price,
become as educated as possible about the local housing market and stay focused
on communities of interest. Traditionally, homes in the strongest school
districts still continue to command premium prices. Think CROSSROADS in 2008! We can introduce to our
excellent mortgage brokers for loan pre-approval and to lock in the best
possible rate. We can help you start looking at homes with any of our excellent
relocation-trained Realtors throughout the Bay Area. All of our agents have
access to special online sites that provide our clients with new listings daily.
Remember, the key is not in finding
a deal, it is in negotiating a deal. 2008 looks like THE year to buy a
home in the San Francisco Bay Area Let CROSSROADS help you stay on top of
market trends! HOME | Site Map | Our Clients | Why CROSSROADS? | FAQ | Contact Us
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