The California Association of Realtors® (C.A.R.) has projected a 14 percent decline in single-family home sales and forecasts a 1.8 percent increase in the median price of a home by the end of 2007. The C.A.R. report states sales are expected to fall to 410,500 units this year, from the 477,460 pace recorded in 2006. The median price of a home will reach $566,500 this year, from the $556,640 median for 2006.
"One of the clouds on the horizon is the result of the housing boom, when many people bought homes sooner than they would have because of the intensity of the market. Now, the market won't provide the equity fast enough for homeowners to step up and there are those who are struggling just to hold their own," C.A.R. President Colleen Badagliacco recently told members of the Silicon Valley Association of Realtors® (SILVAR).
C.A.R. Vice President and Chief Economist Leslie Appleton-Young said, "Sales are weakest in areas that had a lot of new home building in recent years or those areas that had been popular for second home purchases. Prices tend to be softer in those areas as well. This pattern is likely to continue throughout the rest of the year, particularly in areas that were popular among first-time home buyers, which experienced the greatest run-up in prices."
She explained that higher-end markets have seen greater price stability, with the median price of a home declining slightly in some areas.
"The sales mix, with slower sales in the entry and lower-end of the market and relatively stronger sales in the high end, has helped stabilize the median price," she said.
The Central Valley region has experienced a greater decline in sales compared with the state as a whole, and a succession of year-to-year declines in the median price. This trend is likely to continue, due in part to excess inventory of new homes for sale, the report stated.
The San Francisco Bay Area and the moderately priced to higher-priced areas of Southern California have seen a somewhat better sales picture, with small or nonexistent median price declines. These areas should continue to fare better than lower-priced inland markets in the San Bernardino and Riverside areas, according to Appleton-Young, noting sales in those areas remain significantly below the record levels of the peak years.
C.A.R. forecasts the market may bottom out in 2007 and it is likely sales would recover before prices. While the subprime/foreclosure situation is a concern, the report states the direct impact is narrow and impacts more areas than others, however the psychological impact is broader, since lenders are now stricter with loan requirements.
DataQuick Information Systems, a real estate service which monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts, recently reported a total of 36,975 new and resale houses and condos were sold statewide in May 2007. That's up 5.8 percent from 34,949 for April, and down 31.7 percent from 54,099 for May 2006. The average is 48,780.
The median price paid for a California home in May was $484,000, unchanged from the record high for March and April. That was up 2.5 percent from $472,000 for May a year ago.
The typical mortgage payment that home buyers committed themselves to paying in May was $2,266. That was up from $2,258 in April, and down from $2,312 for May 2006.
DataQuick also reported a brighter picture for the Bay Area, reporting a total of 8,080 new and resale houses and condos were sold in the nine-county Bay Area in May, up 8.5 percent from April, though down 18.7 percent from May a year ago.
The median price paid for a Bay Area home increased last month to $660,000, a new peak. That was up 0.2 percent from $659,000 for the month before, and up 3.4 percent from $638,000 for May last year.
Sales in Santa Clara County dropped 12.7 percent from last year's figure, but the county's sales picture, along with the counties of Marin, San Francisco and San Mateo, appears healthy when compared with other counties in the Bay Area. The median home price for a Santa Clara County home in May 2007 was $713,500, up 3.4 percent from the same time last year.
C.A.R. forecasts the market may bottom out in 2007 and it is likely sales would recover before prices. While the subprime/foreclosure situation is a concern, the report states the direct impact is narrow and impacts more areas than others, however the psychological impact is broader, since lenders are now stricter with loan requirements.
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.