Bay Area home sales hit 20-year low

February 14, 2008 6:55:46 PM PST
New figures out Thursday show that less than 4,000 houses were sold in the entire Bay Area last month. That made January the worst month for real estate here in more than 20 years.

Prices are falling too -- 14 to 15-percent in Alameda and Contra Costa counties, to a median of less than $500,000. Chances are, your house is worth $90,000 less today than it was a year ago.

Contra Costa County's real estate market is one of the hardest hit. Not only did the median price of a home fall almost 16-percent from a year ago, home sales plummeted more than 42-percent during that 12-month period.

Gayle Ranch in Danville enjoyed a housing boom before the market went soft. Now, homeowners are starting to notice their neighbors disappearing.

"I know there are two houses on the market on our street. They're just not selling," says homeowner Marry Ann Coleman.

The credit crunch that struck in August has had a sharp and immediate impact on Bay Area sales, bringing the median price of homes down 8.5-percent from January of last year.

Market experts we spoke with are waiting for the effects of the interest rate cuts and newly enacted stimulus package, which includes rebates and tax breaks.

Realtor Carl Battiste is optimistic.

"Once the stimulus package takes effect and interest rates kick in... and the conforming loan changes take place, I think we'll begin to see the inventory get eaten up and we begin to level out," says Battiste.

The reluctance among lenders to make jumbo loans of more than $400,000 has also contributed to the housing decline in the Bay Area, which has some of the costliest homes in the country.

Leon Huntting is a past president of the California Mortgage Brokers Association. He says the newly increased limit of conforming loans to more than $700,000 should help.

"People will be able to refinance hopefully at a lower costm," says Huntting.

Bob Pittman manages and lives at the Lakeview condominium complex, which has yet to be converted to condos. In the meantime, the 15 units are being rented. Pittman has noticed a different kind of tenant.

"Now the trend is that we're getting the people who are being foreclosed on who are lowering their monthly outlay in order to get into rentals to wait for the market to turn around," says Pittman.

There's sure to be a lot of debate over the next couple of weeks, perhaps months over just what these housing statistics mean.

Read the breakdown of numbers by county from the DataQuick report here.