Bay Area Home Prices and Sales Plummet

The California housing market has seen better days. Foreclosures are rising across certain parts of the state, while sales are non-existent in other areas.

Across the Bay Area, for example, home prices fell in September for the first time in more than four years, while sales hit their lowest level since 2001, a real estate information service reported Tuesday.

The median price paid for a home in the nine-county Bay Area was $611,000 in September, a 1.5 percent decrease from $620,000 for the month before and a 0.8 percent drop from $616,000 for September 2005, according to DataQuick Information Systems.

The year-over-year decline was the first since March 2002. Last month’s median was in part tugged down by increased sales of lower-cost condo conversions in the East Bay.

“The last time prices dropped in the Bay Area was after the dotcom bust. There were year-over-year declines in the median in the 1-to-3 percent range for six months. This time around there isn’t really any economic distress. It simply looks like the real estate market’s momentum last year and earlier this year pushed prices beyond their equilibrium point and the market is reestablishing its balance,” said Marshall Prentice, DataQuick president.

A total of 7,907 new and resale houses and condos were sold in the region last month. That was down 13.4 percent from 9,128 for August, and down 29.4 percent from 11,205 for September last year, DataQuick reported.

The typical monthly mortgage payment for Bay Area buyers was $2,915 in September, down from $2,966 a month earlier and up from $2,713 in September 2006. Adjusted for inflation, mortgage payments are 14 percent higher than they were at the peak of the prior cycle 16 years ago.

It’s a question of timing. The market couldn’t remain red hot forever, so this is just the natural slow down that follows any extended period of strong sales.