Regional Spotlight: Opportunities for Buyers, Bay Area Market Struggles in Q3

RISMEDIA, Oct. 26, 2007-Home sales declined by 30% in the Bay Area, year-over-year, across all housing types, according to a third quarter report released today by the research division of Prudential California Realty based on an analysis of MLS data. Median prices continued to gain momentum, rising nine percent, year-over-year. Listing inventory saw its most significant change in several quarters, dropping by seven percent after stabilizing in the second quarter.

All counties reported decreases in sales, with Solano continuing to have the most significant decline (-46%) while San Francisco had the smallest drop (-16%), year-over-year. The story of median price, however, was predominantly positive. San Mateo and Marin recorded the highest overall increases in median price with a 12% jump across all housing types.

“The market continued to contract in the third quarter and it is unlikely that we have seen the bottom of it yet,” said Scott Kucirek, general manager of Prudential California Realty based in Pleasanton. “This data shows the fallout of the loan problems that came to a head in mid-August when sales activity stalled. We are seeing some positive signs in the first few weeks of the fourth quarter in several counties, but on the whole, the market is still struggling to find its equilibrium.”

While overall sales have declined significantly, activity was uneven, with remarkable resilience in the sale of high-end properties in Marin (Corte Madera, Kentfield and Greenbrae) and San Mateo (Hillsborough, Menlo Park and Portola Valley) even as activity in nearby areas experienced significant drops. Unique, competitively priced homes in the sought-after areas continued to sell well as established buyers were able to purchase in the most advantageous market in years.

In contrast, in many counties only those who had a pressing need to sell, whether it was due to a job transfer, family reasons or foreclosure, were willing to make the price adjustments necessary to attract buyers. This was especially true in low to mid-range homes in city subdivisions of Santa Clara and Sonoma where there was a surplus of inventory. Sellers in these areas faced strong competition from bank-owned properties with aggressive price reductions.

Added Kucirek: “Emerging from this correction are unprecedented opportunities for buyers in the Bay Area. Investors are increasingly inquiring about deals as inventory levels stabilize.”