Bay Area home sales plummet amid mortgage woes
October 18, 2007
La Jolla, CA.----Bay Area home sales sank to their lowest level in more than two decades in September, the result of a continuing market slowdown and borrowers' increased difficulties in obtaining "jumbo" mortgages, a real estate information service reported.
A total of 5,014 new and resale houses and condos were sold in the nine-county Bay Area in September. That was down 31.3 percent from 7,299 in August, and down 40.1 percent from 8,374 for September a year ago, DataQuick Information Systems reported.
Sales have decreased on a year-over-year basis the last 32 months. Last month was the slowest September in DataQuick's statistics, which go back to 1988. Until last month, the slowest September was in 1991 when 5,735 homes were sold. The strongest September was in 2004 when sales totaled 12,868. The average for the month is 8,961. "A lot of escrows just didn't close in September because the buyers couldn't get financing. Some of those sales might close this month or next, but many of the deals are going to be put on hold or die on the vine. Jumbo financing has become more available the last few weeks, but lenders are being more cautious than before, and the loans cost more," said Marshall Prentice, DataQuick president. The number of Bay Area homes purchased with jumbo mortgages dropped from 3,762 in August to 1,935 in September, a decline of 48.6 percent. A jumbo mortgage is a home loan for $417,000 or more. For loans below that threshold, the sales decline was 14.0 percent, from 2,675 in August to 2,301 in September. Historically, sales drop by about 10 percent from August to September. The median price paid for a Bay Area home was $625,000 last month, down 4.6 percent from $655,000 in August, and up 0.8 percent from $620,000 for September last year. If the jumbo-financed portion of the market had remained stable, last month's median would have been $654,000. DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Due to late data availability, the September statistics for Alameda are extrapolated from the first three weeks of the month. The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $2,973 last month, down from $3,171 the previous month, and up from $2,958 a year ago. Adjusted for inflation, current payments are 14.6 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 9.6 percent below the current cycle's peak in June last year. Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels. Financing with adjustable-rate mortgages is down, financing with multiple mortgages has declined significantly. Down payment sizes are stable, flipping rates are flat while non-owner occupied buying activity has increased, DataQuick reported
