Buyer’s Market Takes Hold in Bay Area

Rising California home prices are no longer a sure thing. A buyer’s market has taken hold, reports the San Jose Mercury-News.

Many home sellers, bogged down in a housing downturn, are now doing the only thing they can to sell - dropping home prices.

Only this time, the sagging California housing market often means taking a loss if the home was bought in 2005 or 2006.

Christopher Thornberg, principal of Beacon Economics, and the former UCLA Anderson Forecast economist who predicted the “housing bubble” since 2002, said that sellers’ only hope is to “price to sell.”

“You want to get out of the market,” he said. “There’s no point in holding out if you want to get out before the next three years.”

With the credit market slowed and housing on the decline, effects on buyers have been evident, said Max Neiman, associate director of the Public Policy Institute of California, a think tank based in San Francisco.

The credit collapse unnerved providers of Bay Area mortgages so “they’re not willing to buy, not willing to bundle and not willing to provide credit.”

“Any number of people don’t want to get caught up in the process and worry about prices falling even further,” he said. “They want to sell now.”

Thornberg said the instability in the California mortgage market have made a state of fence-sitters, making the market worse.

Research by the Contra Costa Times found that while east Contra Costa and Alameda counties as well as Solano County have lower-cost homes, homes in Alameda, Walnut Creek, Pleasant Hill and even blue-chip San Francisco are affected by the price drops.

“This will spread,” Thornberg said. “It will eventually have an effect. … It will circulate through the entire Bay Area and it will be a stubbornly slow process.”

Few places have been hit as hard as San Joaquin County, where California mortgage loan foreclosures are estimated to be some of the highest in the nation, according to RealtyTrac.

In the first half of 2007, the online company estimated about 1 in 27 households in the county - the highest rate in the nation - were affected by a foreclosure.

The California Association of Realtors reported that the Central Valley home was $353,820 in July 2006 and dropped to $326,600, a 7.7 percent decrease.

Continue reading this San Jose Mercury-News report on the emergence of a Bay Area buyer’s market …