Saturday, February 17, 2007

Bay Area home prices, sales sliding toward cellar

Posted on Fri, Feb. 16, 2007

Home prices, sales sliding toward cellar

By Janis Mara

Bay Area home prices slipped last month and home sales fell for the 24th month in a row, a real estate service reported Thursday.

January's median home price of $601,000 was down 1.5 percent from January 2006, and home sales declined by 4.1 percent, DataQuick Information Services reported.

In Contra Costa County, the median home price fell 4.3 percent to $550,000, and in Solano County prices dropped 8.6 percent to $430,000.

Alameda County prices rose slightly, 0.9 percent, to $570,000.

Sales dropped 2.8 percent in Alameda County and 10.8 percent in Contra Costa County. Solano County sales fell 14 percent, the biggest drop in the Bay Area.

Although this news may be painful to Bay Area homeowners, there was a bit of a silver lining. The typical monthly mortgage payment for Bay Area homeowners was $2,804 last month, down from $2,828 in December and down from $2,812 in January 2006, DataQuick reported.

It has been taking longer to sell homes here for some time, reflecting a national housing slump that saw sales fall in 40 states and median prices drop in nearly half the metropolitan areas surveyed in the final three months of last year.

The median house price is in the middle, with half of the area's prices higher and half lower. It's a more accurate measure because unusually costly or inexpensive houses can make an average look unrealistically high or low.

It's normal for sales to decrease from December to January, said Andrew LePage, a DataQuick analyst. Builders and investors often go all out to make sales in December, so January is usually slow by comparison. And spring is buying season, not winter.

Still, "there's no doubt these are relatively slow sales," LePage said.

The Bay Area's 6,168 sales of houses and condos last month were down 26.3 percent from December and marked the lowest total for any January since 1996, when 5,504 homes were sold. The average January sales number since 1988 has been 6,455, according to DataQuick numbers.

Lower prices and fewer sales have been common during recent months, said Christopher Thornberg, an economist with Beacon Economics.

"We are scraping along the bottom of the market," he said. "Prices are going to languish in the nether zone for some time."

Thornberg predicted that prices would continue to decrease slowly the rest of the year before possibly beginning a recovery in 2008.

"I don't see any substantial recovery on the activity side until 2010 or 2011," he said, meaning that the number of homes sold will remain low until then.

LePage agreed, although he emphasized that DataQuick does not make market predictions.

"The market almost never turns fast," he said. "There's hope in some areas of the industry that we're about to stabilize and coming up on hitting bottom, but I'm not convinced of that looking at the data."

Chuck Edell, president of the Bay East Association of Realtors, said homeowners shouldn't be too worried about home values, however. Housing prices have not declined markedly, he said.

"I don't see a bad situation here," Edell said. "I think everybody is comparing it to the best years of real estate" when prices soared and homes sold quickly.

"The last five years were crazy," Edell added. "This is a more healthy market."

The Associated Press contributed to this report. Reach Janis Mara of the Oakland Tribune at or 510-208-6468.

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