RISMEDIA, July 26, 2007–Home sales continued to drop in the Bay Area in the second quarter, falling 22 percent, year-over-year, for all housing types, according to a report released yesterday by the research division of Prudential California Realty based on an analysis of MLS data. New listings stabilized (+1%) as prices continued their upward ascent (+8%), year-over-year.
Entry-level neighborhoods in all counties were consistently the hardest hit by the ongoing market correction in the second quarter. Rising interest rates and tighter lending standards meant that there was a smaller pool of active qualified buyers. A spike in foreclosures increased inventory levels in many areas, particularly in Solano County where a significant portion of the listings were short sales. Compounding the problem was the lengthy sales process associated with short-sale properties that was frustrating to buyers.
At the upper-end of the market, conditions were very different with positive sales growth in many of the most desirable neighborhoods of the counties, including Santa Clara and Alameda. Areas with good school districts maintained solid demand. Buyers in this segment were relatively insulated from market fluctuations and easily qualified for loans, supported by stock market gains and equity they had built in their homes. Overall, activity in many of the mid- to upper- end Bay Area markets was balanced and buyers and sellers were aligned in their expectations.“For several quarters we have been seeing diverging activity between the upper and lower ends of the market. In 2003, homes priced at $2 million+ were spending nine months to a year on the market and now they are often moving in one month,” said Scott Kucirek, general manager of Prudential California Realty based in Pleasanton. “However, the sales gains in pockets of the upper end are not enough to offset the significant downward trends in most of the Bay Area counties. The net result is depressed activity and we do not forecast an upswing for the next several quarters.”
Added Kucirek: “For the most part, only distressed sellers are willing to take significant price reductions on their property. Buyers are finicky, presenting one offer and backing away if sellers counter. There is a holding pattern at the moment as consumers watch the market.”
Continuing to buck the wider trend was Marin County, the only county to maintain the same level of overall sales activity from second quarter 2006. Solano County experienced the sharpest drop with sales falling 46 percent across all housing types, while San Francisco sales softened ten percent, year-over-year.
For more information, visit www.prudentialproperties.com.