Regional Spotlight: Bay Area Housing Market Continues to Contract but Maintains Normal Activity

RISMEDIA, April 25, 2007-Home sales decreased 14% across the Bay Area, year-over-year, according to a first quarter report released today by the research division of Prudential California Realty based on an analysis of MLS data. New listings continued to accumulate, growing by 10% across the region, year-over-year.

Homes also spent 23 days longer on the market than they did in the first quarter of 2006. Median prices remained buoyant amid the downward trends, rising two percent year-over-year.

"The first quarter analysis shows the market is continuing to contract from the height of sales activity two years ago, however it still falls within a normal range," said Scott Kucirek, general manager of Prudential California Realty based in Pleasanton. "Healthy consumer confidence, job growth and strength in the technology sector continue to underpin demand. Overall, consumers are accepting the new market dynamics and learning to negotiate through them."

Sales activity was segmented in the first quarter with mid- to upper-range properties in sought-after neighborhoods selling within two weeks and garnering multiple offers in areas of San Francisco, San Mateo and Santa Clara counties where inventory was tighter. Buyers in these markets lamented the shortage of quality properties as they leveraged their power to cherry pick the best homes and pass over the less desirable.

In contrast, the entry-level segment of the market was struggling in parts of the Bay Area, including Alameda and San Mateo counties where first-time buyers were approaching purchases with caution. The collapse of subprime lending along with tighter underwriting guidelines narrowed options for some first-time buyers and were beginning to have an effect on demand in pockets of areas outside of San Francisco County.

While overall home sales decreased in all counties, there were significant differences between areas. The sharpest downturn occurred in Solano County where unit sales fell 25% across all housing types. The Napa and Marin County markets remained relatively unchanged from 2006 activity (-1% and -2%, year-over-year, respectively). Marin County also had the distinction of having the highest median prices in the Bay Area during the first quarter for single-family detached homes ($1,058,619).

Added Kucirek: "We expect activity to remain similar to 2006 throughout the spring market as the correction continues. Sales are unlikely to spike significantly, but activity will remain normal and consistent."

For more information, visit www.PruRealty.com.

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