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Bay Area home sales continue to drop, prices reach new peak

July 19, 2006

La Jolla, CA.----Home sales in the Bay Area continued to slow last month as prices reached new highs. Prices increased at their slowest pace in more than three years, a real estate information service reported.

A total of 9,892 new and resale houses and condos were sold in the nine-county region last month. That was up 9.1 percent from 9,064 for May, and down 24.0 percent from 13,014 for June last year, according to DataQuick Information Systems.

While the year-over-year decline was the fifteenth in a row, last month's sales count was the highest since October last year when 10,508 homes were sold. The average June sales count since 1988 is 9,840.

"The market is definitely slowing but can only be considered "slow" when compared to the hot market of 2004 and 2005. In reality, today's market is pretty normal and balanced, right between the grim times of 1993 to 1995 and the frenzies of 1999 and 2004-2005. The Bay Area's market is reaching the end of a real estate cycle, it looks like prices could flatten out sometime this fall. What happens after that is anyone's guess," said Marshall Prentice, DataQuick president.

The median price paid for a Bay Area home was $644,000 last month, the third record in a row. That was up 2.1 percent from May's $631,000, and up 5.6 percent from $610,000 for June a year ago. Last month's year-over-year increase was the lowest since May 2003 when the $427,000 median was up 3.4 percent.

DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $3,183 in June. That was up from $3,091 in May, and up from $2,651 for June a year ago. Adjusted for inflation, mortgage payments are 25 percent higher than they were at the peak of the prior cycle sixteen years ago.

Indicators of market distress are still largely absent. The use of adjustable-rate mortgages has decreased the last half year. Foreclosure rates are coming up from last year's low point, but are still below normal levels. Down payment sizes are stable and there have been no significant shifts in market mix, DataQuick reported.