RISMEDIA, July 23, 2011—Investors bearing cash and traditional home buyers confident about their jobs took advantage of some of the most favorable home prices in years during the second quarter of 2011, sparking double-digit increases in the number of homes sold compared with the prior quarter in all nine San Francisco Bay Area counties, according to an analysis of MLS data by the research division of Better Homes and Gardens Mason-McDuffie Real Estate.
In the second quarter, 13,981 existing, single-family detached homes changed hands across the Bay Area, up 33 percent from 10,519 homes sold in the first quarter. Even so, that figure was down 8 percent from 15,246 homes sold in the second quarter of 2010, when homebuyers were motivated to complete a purchase by the impending expiration of federal and state tax incentives for homebuyers.
Absent that incentive this year, investors and home buyers found motivation in some of the lowest home prices since 2003, when the Bay Area median price was $550,000. For the second quarter of 2011, the median price of a home sold in the Bay Area was $536,603, less than 1 percent higher than in the second quarter a year ago but 14 percent higher than in this year’s first quarter, when the median price was $468,360.
Santa Clara County accounted for the greatest number of sales (3,090), up 43 percent from the first quarter and 51 percent from a year ago, while San Mateo County (1,197 homes sold) registered a 56 percent quarter-over-quarter increase and a solid 60 percent jump on an annualized basis. Home sales were up by 40 percent for the quarter and 44 percent for the year in The City of San Francisco, while Marin County sales climbed 42 percent from the first quarter. Other volume leaders included Contra Costa and Alameda Counties, with 2,934 and 2,697 sales, respectively.
Median sales prices were modestly higher in seven of the nine Bay Area counties compared with the first quarter but were slightly lower from the year-ago period in the same number of counties. Santa Clara County (+15% for the quarter; +3% for the year) and Contra Costa County (+14 percent for the quarter; +3% for the year) were the only counties to experience increases over both periods. Napa County (-12% year over year; -1% for the quarter) and Solano County (-11% for the year; -1% for the quarter) were the only counties to register declines over both periods.
Aggressively priced homes continued to sell quickly. The average Bay Area home was on the market just 65 days before receiving a contracted offer, up slightly from 57 days a year ago. Among the nine Bay Area counties, San Francisco registered the shortest average time on the market at 44 days, while Napa County had the highest average at 112 days.
According to Pat Shea, President of Better Homes and Gardens Mason-McDuffie Real Estate, “Looking ahead, the continued presence of large numbers of short sale properties should help maintain a favorable price environment for investors with cash, first-time homebuyers and current homeowners considering a lifestyle move.” Buyers planning to finance a home purchase should be aware of a proposed reduction in the maximum loan amount eligible for Fannie Mae, Freddie Mac and FHA programs from $729,500 in the seven urban Bay Area counties (the current maximum is $557,500 in Solano County and $662,500 in Sonoma County) to $625,500 ($400,200 in Solano County and $520,950 in Sonoma County). After September 30, mortgages that exceed the limit will require a more expensive “jumbo” loan. Meanwhile, homeowners who may qualify to sell their home via short sale may wish to consult a tax professional to explore the tax ramifications of completing one before the end of 2012, when current tax rules governing short sales are set to expire.
For more information, visit www.bhghome.com.