A real estate information service reported this week that Bay Area home sales sank to their lowest level in more than two decades in September, the result of a continuing market slowdown and borrowers' increased difficulties in obtaining "jumbo" mortgages. However Realtor officials note, all real estate is local with large variations within a given area. Silicon Valley is one of these areas, and while sales are down slightly compared with last year's figures, the market is still healthy.
DataQuick Information Systems reported a total of 5,014 new and resale houses and condos were sold in the nine-county Bay Area in September, down 31.3 percent from 7,299 in August, and down 40.1 percent from 8,374 for September a year ago.
Sales have decreased on a year-over-year basis the last 32 months. Last month was the slowest September in DataQuick's statistics, which go back to 1988. Until last month, the slowest September was in 1991 when 5,735 homes were sold. The strongest September was in 2004 when sales totaled 12,868. The average for the month is 8,961.
"A lot of escrows just didn't close in September because the buyers couldn't get financing. Some of those sales might close this month or next, but many of the deals are going to be put on hold or die on the vine. Jumbo financing has become more available the last few weeks, but lenders are being more cautious than before, and the loans cost more," said Marshall Prentice, DataQuick president.
The number of Bay Area homes purchased with jumbo mortgages dropped from 3,762 in August to 1,935 in September, a decline of 48.6 percent. A jumbo mortgage is a home loan for $417,000 or more. For loans below that threshold, the sales decline was 14.0 percent, from 2,675 in August to 2,301 in September. Historically, sales drop by about 10 percent from August to September.
The median price paid for a Bay Area home was $625,000 last month, down 4.6 percent from $655,000 in August, and up 0.8 percent from $620,000 for September last year. If the jumbo-financed portion of the market had remained stable, last month's median would have been $654,000.
In Santa Clara County, DataQuick reported sales dropped 37.8 percent from 1,986 in September 2006 to 1,235 in September 2007. Unlike many areas in the state, the median price for all homes in the county once again increased, by 3.7 percent – from $671,500 in September 2006 to $696,500 in September 2007. Santa Clara County had the greatest median price increase among the nine-county Bay Area last month.
Brian Crane, a board director of the Silicon Valley Association of Realtors, said at the Real Estate Expo in Anaheim this month, Realtor officials noted Silicon Valley is in an enviable position since the drop in sales has not been as severe in Silicon Valley; foreclosures have increased, but the delinquency rate is also low compared with the rest of the state. Crane urged members to get the news about Silicon Valley's healthy real estate market to their clients.
"Consumer confidence is bumpy because of bad news about the market. But it's not that way in Silicon Valley," said Crane. "This area is unique because we have job growth and our economy is healthy."
REInfoLink, the multiple listing service for Santa Clara and four other counties, shows just a slight drop or no change in single family home sales in a number of Silicon Valley communities during the month of September - 17 homes sold in Los Gatos compared with 15 the same period last year; Saratoga, 19 from 22 last year; Palo Alto, 32 from 34; Cupertino, 28 from 33; Sunnyvale 39, the same number sold last year.
"There are lots of opportunities that present itself and buyers just need to get out there," Crane told members. "It's pretty good down here compared to the rest of California. So put on your stirrups and get ready to tell your clients the real story. As the saying goes, 'Buy land; they ain't making more of it.' It's a good time because buyers don't have to compete anymore."
In the Bay Area, the typical monthly mortgage payment that buyers committed themselves to paying was $2,973 last month, down from $3,171 the previous month, and up from $2,958 a year ago. Adjusted for inflation, current payments are 14.6 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 9.6 percent below the current cycle's peak in June last year.
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.
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