The California Association of Realtors® (C.A.R.) reported home sales in the state decreased 20.8 percent in March compared with the same period a year ago, while the median price of an existing home increased 3.2 percent. The Bay Area remains the strongest market in the state, according to a C.A.R. official.
Closed escrow sales of existing, single-family detached homes in California totaled 427,110 in March 2007, down from the 539,170 sales pace recorded in March 2006. The median price of an existing, single-family detached home in California during March 2007 was $580,090, up from $562,130 median for March 2006. The March 2007 median price increased 3.9 percent from February's revised $558,130 median price.
"March sales fell below the levels of recent months in reaction to an uptick in mortgage rates earlier this year, along with tighter underwriting standards. The year-to-year decline in March was larger than in recent months in part because sales in March 2006 were the strongest in all of last year," said C.A.R. President Colleen Badagliacco.
Badagliacco added that recent news regarding foreclosures and the subprime situation "had an adverse impact on the market psychology of many buyers, leading some to delay their home-purchase decisions."
According to C.A.R. Chief Economist and Vice President Leslie Appleton-Young, "The 20.8 percent March decline was pretty significant. We still see a market that's contracting a bit. If you look at the state as a whole, the Bay Area is the strongest market right now. Southern California is doing okay; in the inland areas, where you have a lot of supply of new construction that isn't occupied yet, where you have a lot more subprime activity, foreclosure increases are much more dramatic. Those are the areas that will continue to have the drag on the market in 2007."
However, Appleton-Young noted that the economy is better today than during the mid-1990s.
"This year, the economy is expanding. That's what's differentiating this cycle from what we saw at the time where in three years LA County lost 750,000 jobs in the mid-1990s," she said. "This time around, we have a housing market that is adjusting down on top of an economy that is expanding."
Silicon Valley Association of Realtors® (SILVAR) President Mark Burns, who has been a Realtor in the area for the past 22 years, believes the Silicon Valley real estate market continues to do well in comparison to the nation and state.
"There are a number of counties getting hit hard but these are far away from Silicon Valley and most of the Bay Area," said Burns. "Silicon Valley took quite a long time to really pick up steam after the Internet bubble burst because so many companies based here were affected. One estimate was that we lost 200,000 jobs during that downward adjustment."
"The 'local' factors must be considered when reading about statewide or national trends on price drops and foreclosure rates. Unemployment rates and job creation are very positive here and have been for many decades," Burns added. "The economy throughout our region is very strong and continues to grow. The other factors are myriad, but suffice it to say, Silicon Valley is one of the nicest places to live in the world. Cultural diversity, availability of social services and business services, weather, schools, etc., it just goes on and on."
Burns explained that sales rates of existing homes in California will go up and down because they are usually compared to the same month in the previous year and not as a rolling average.
"An abnormally high sales rate in March 2006 (as rates were going up) can easily produce the statistical 20 percent drop the next year. The trends that we all assume from that do not exist but it makes for great headlines," Burns said. "Year over year nationwide and statewide, housing sales continue to grow and even in slow periods are only revised downward a percentage or two."
Home sales in Santa Clara County increased 34.6 percent in March 2007 compared with the prior month, although sales dropped 21.7 percent compared with the same period last year. However, the upward trend in property values continues in the Valley.
Newly released figures from RE InfoLink, the Multiple Listing Service of the county, reveal the median price of a Santa Clara County home jumped to $868,406 in April 2007.
The median price of a single family home in Santa Clara County was $830,000 in March of 2007, up 5.1 percent from the previous month and up 9.2 percent from March 2006.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.