Saturday, April 25, 2009

San Francisco Bay Area housing market likened to game shows

Home prices plunge more than 56 percent as buyers troll for deals amid the ruins of a once booming market.

by Broderick Perkins
© 2008 DeadlineNews.Com
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Deadline Newsroom - A 'Let's Make A Deal' approach to home buying in the San Francisco Bay Area, pushed increased sales to a seven-month streak in March, but home prices remained in 'Jeopardy,' falling more than 45 percent from a year ago.

MDA DataQuick of San Diego said, while bargain hunters, hoping the 'Price is Right,' pushed sales up 29 percent from a year ago March, the volume of low-priced home sales pushed the median price down 45.9 percent during the same period.

Closed escrow sales on new and resale houses and condos totaled 6,325 for March this year compared to 4,898 in March 2008.

Meanwhile the median price for the same group of homes in March fell to $290,000, down from $536,000 a year ago. The median price is less than than half what it was at the peak median of $665,000 in June and July of 2007 -- a whopping 56.4 percent plunge.

DataQuick says the massive price drop in the nine-county area doesn't mirror value declines in typical area homes, but reflects slow high-end sales which comprise a small portion of sales.

In March 51.2 percent of all Bay Area resale homes were cheaper foreclosed properties, up from 23.2 percent a year ago. By county, the percentage of foreclosure sales ranged from 11.5 percent in San Francisco County to 70.0 in Solano County.

That's because foreclosures are at record levels and larger mortgages remain tougher to come by, creating a 'Deal or No Deal' conundrum.

A total of 135,431 default notices were sent out during the January- to-March period -- up 80 percent from 75,230 for the prior quarter and up 19 percent from 113,809 in first quarter 2008, according to DataQuick.

Mortgages for more than $417,000 were used to finance only 19 percent of the Bay Area’s home sales last month, compared with more than 60 percent before the credit crash hit.

"More than any other region, the Bay Area is waiting for so-called jumbo loans to come back on line. Even with prices off their peaks, most home purchases in the upper half of the market still require a mortgage for more than $417,000, which are far more difficult to come by. We think there’s a good chance those larger loans will become more available during the second or third quarter," said John Walsh, MDA DataQuick president.

More jumbo loans could become available during the second or third quarter this year, Walsh said.

Market stress was as mixed as a 'Wheel of Fortune' in March. Foreclosure activity was nearing the 2008 peak, as investment buying was above-average. Financing with adjustable-rate and multiple mortgages was at an all-time low. Down payment sizes and flipping rates were stable, DataQuick reported.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!

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