Bay Area Home Prices Continue to Drop

By David Morrill

RISMEDIA, July 22, 2008-(MCT)-Bay Area home prices continued to spiral downward in June due to a combination of sellers settling for less, more aggressively-priced foreclosures and sales activity increasing in less-expensive inland areas.The Bay Area’s median price was $485,000 in June, which was the first time in more than four years that it was below the $500,000 mark, La Jolla-based DataQuick Information Systems said Thursday. That was 27 percent lower than the peak $665,000 median reached in June and July of last year.

The last time the median was below the half-million mark was April of 2004. The median price is the point where half of the homes sold for more and half sold for less.

Some brokers are cautiously optimistic that we are close to reaching the bottom and should see a recovery in the near future.

“Those people who bought homes three or four years ago are probably kicking themselves right now,” said John Holmgren, owner of Holmgren & Associates. “But if those people hang in there, I imagine they will get back what they paid for it.”
Not all, however, would agree.

With a number of foreclosures still coming down the pipeline, it could be awhile before we bottom out, said Jeffrey Michael, director of the business forecasting center at the University of Pacific in Stockton.

“I think the prices now are approaching levels that start to make sense,” Michael said. “I wouldn’t be surprised that three years from now, prices are still within 10 percent of where they are now.

“The question is whether it’s going to flatten out, or whether the foreclosures are going to continue to drive the prices even lower.”

In the Bay Area, a total of 7,178 houses and condos were sold in June, up 15 percent from 6,216 in May but down 9.9 percent from 7,964 for June 2007.

For median pricing, the market that was hit the hardest was Contra Costa County where home prices dropped 36.7 to $378,000 from $597,000 last year.

The least affected was San Francisco County, which dropped about 12 percent from $825,000 to $726,750.

Marin, San Mateo and San Mateo counties were the only other ones to see the drop in the low teens.

“The only real good news from these numbers is that it’s opened up the opportunity for people to buy homes that would not have been possible if this correction had not occurred,” Holmgren said.

In the state of California, median prices plummeted 31.5 percent in June compared with the same month last year.

The statewide median home price last month was $328,000. The statewide median home price peaked in May 2007 at $484,000.

The Associated Press contributed to this article.