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December 19, 2006 > Bay Area home prices drop in November, sales at 5-year low

Bay Area home prices drop in November, sales at 5-year low

Silicon Valley/San Jose Business Journal, December 14_Bay Area home prices dropped in November below year-ago levels for the second time in the past three months, a real estate information service reported Thursday.

Data Quick Information Systems said sales held steady at a five-year low.
The median price paid for a home in the nine-county Bay Area was $616,000 in November. That was 0.3 percent higher than $614,000 in October but down 1.4 percent from $625,000 in November last year.

Median prices rose year-to-year, however, in Santa Clara County (up 1.8 percent to $665,000) and San Francisco (up 0.7 percent to $754,000). They were down 1 percent to $726,000 in San Mateo County and by 4.6 percent to $562,000 in Contra Costa.

Last month's year-over-year decline in the Bay Area was the steepest since prices fell 2.1 percent in February 2002. In September this year the median fell 0.8 percent from last year, marking the first annual decline since March 2002, when prices declined 1.3 percent. In October this year the median went positive slightly, up 0.5 percent from a year ago.

Last month's median was 4.3 percent below the $644,000 June peak. Dataquick said much of the drop is seasonal: summer buyers generally pay around 3 percent more for their homes than those who purchase between November and February.

"Right now it looks like the Bay Area market is settling in on a price level that could last until spring. What happens after that depends on broader economic factors including interest rates, job growth and household incomes. As prices stabilize and sellers get real about asking prices, a lot of the fence-sitters will jump in. We could see a moderate increase in sales counts," said Marshall Prentice, DataQuick president.

A total of 7,204 new and resale houses and condos sold in the Bay Area last month. That was down 9.7 percent from 7,979 sales in October, and down 25.9 percent from 9,717 in November last year. A decline from October to November is normal for the season.

Last month's sales count was the lowest for any November since 2001, when 6,644 homes sold. Since 1988, November sales have ranged from 5,579 in 1994 to 10,897 in 2004. The average is 7,725.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $2,865 last month. That was down from $2,901 in October, and down from $2,921 for November a year ago. It peaked in June at $3,183. Adjusted for inflation, mortgage payments are 12.9 percent higher than they were at the peak of the prior cycle in early 1990.

Dataquick said that indicators of market distress are still at a moderate level: Financing with adjustable-rate mortgages is flat. Foreclosure activity is rising but is still within the normal range. Down payment sizes are stable, as are flipping rates and non-owner occupied buying activity.

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