Bay Area, Solano Housing Markets Continue to Decline

Bay Area, Solano Housing Markets Continue to Decline
By Ines Bebea

FAIRFIELD - The housing market continues to cool off compared to sale prices last year - and there are no signs of when a recovery might happen.

For the Bay Area, prices dropped to a five-year low with a 1.4 percent decrease over a year ago, leaving average home sale prices at $616,000 in November, according to the monthly housing report by DataQuick News. In Solano County, prices dropped by 9 percent - the largest drop of any of the nine counties in the region.

"What you are seeing right now is also more sellers willing to negotiate by taking off $30,000 to $50,000 in the closing cost," said Daniel F. Lum, a real estate agent with Gateway Realty in Fairfield. "And in a buyer's market, that means a lot more options."

This time of the year the housing market is also affected by the weather because people prefer to see houses during longer daytime hours and when the weather is nicer, he said.

Other factors are holiday spending and end-of-the-year expenses such as property insurance or loan payments.

Some of the sellers in the market now are people who cannot make the payments on refinanced loans, people relocating because of work and households that went from a two-person income to a one-person income.

"But as far as Solano County is concerned, we get more activity because we are the most affordable out of the nine counties in the Bay Area," he said. "As one of the most rural counties we have a lot of more room to expand and build."

For prospective buyers who start house hunting in San Francisco, for every mile away from the city they can knock off $5,000 to $10,000 in price, Lum said.

With more inventory in the market, it will continue to be a buyer's market until the supply and demand reach a balance or moves in favor of the seller. The extra inventory gives buyers more flexibility and options to make a decision and depending on the seller's motivations to move the property prices may continue to drop.

"What we saw last year were prices that actually stalled," said Lisa Adrian, a real estate agent with ReMax Gold. "Prices will continue to go down until the spring of 2008 for builders and sellers."

Adrian couldn't pinpoint exactly where the falling prices will stop, but said regardless of the current slow market situation the competition to make a deal is still present. The biggest incentives are in luxury homes and deals from builders.

"Nobody knows where the drop will stop, but it is going to continue to go down," she said. "After prices were so high last year, the market will correct itself and that takes time."

The upside to this current market is that sellers will continue to be more aggressive to attract buyers. This is also a plus for first-time buyers because they will see more homes and shop for better deals.

"Winter sales are going to happen," said Adrian. "The market will pick up again but slowly. People are always going to be looking for housing."

Reach Ines Bebea at 427-6934 or ibebea@dailyrepublic.net.

STILL IN DECLINE

Home sale statistics for November:

Home sales Nov. 05 Nov. 06 Median 05 Median 06

San Francisco 594 441 $749,000 $754,000

Solano 685 531 $490,000 $446,000

Bay Area 9,717 7,204 $625,000 $616,000

Source: DataQuick Information Systems