Bay Area Housing Market

As promised, here's a better look at the existing home sales numbers with an eye towards the bay area.

If you were watching the headlines yesterday, you saw the world coming to an end!
It's the natural sensationalistic thing to do.
Is that a word?
It should be!







Headlines like:

"Existing Home Sales Tumble in 2006"
"Existing Home Sales Hit 17-Year Low While Mortgage Rates Rise"
We even have the sky falling overseas,
"European Markets Fall On US Existing Home Sales Data, Weak Oils ..."

Headlines like that would lead you to believe.

In scanning the headlines an came across this little tidbit:
Two different news agencies, two different takes on the same story.



One says prices "Plunged", the other says they slipped "Modestly". Same numbers, same report, same day. Two sides to every coin right?

In the bay area here's how our numbers played out:


Here's a clip from a newsletter:
"A total of 7,488 new and resale houses and condos sold in the Bay Area last month. That was up 3.9 percent from 7,204 in November, and down 19.9 percent from 9,347 for December last year, according to DataQuick Information Systems.

Sales have declined on a year-over-year basis the last 21 months. Last month's sales count was the lowest for any December since 1996 when 7,180 homes were sold. The average for all Decembers since 1988 is 8,339. "

The chart above shows sales prices.
I believe these are Median but cannot verify that.
Over the year, you can see we're actually a bit higher than last January.

Also from DataQuick:
"The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $2,801 last month. That was down from $2,872 in November, and down from $2,943 for December a year ago. It peaked in June at $3,183. Adjusted for inflation, mortgage payments are 10.3 percent higher than they were at the peak of the prior cycle in early 1990.

Indicators of market distress are still in the normal range. Financing with adjustable-rate mortgages is flat. Foreclosure activity is rising but is still in the normal range. Down payment sizes are stable. Flipping rates and non-owner occupied buying activity are down, DataQuick reported."

"The median price paid for a Bay Area home was $612,000 in December. That was down 0.6 percent from $616,000 in November and up 0.5 percent from $609,000 for December a year ago. The median peaked last June at $644,000."


and I'll include this comment:

"Clearly the market is in a lull while potential buyers wait for lower prices. Because of seasonal factors prices may edge down during the next two months, but are likely to move up again in spring. An important factor is whether or not mortgage interest rates stay where they are. If they do, we should expect the market to pick up in March or April," said Marshall Prentice, DataQuick president."



What's it all mean?
To the short term person, the flipper, the speculator:
Not so good news, best to have sold in June when prices hit there high.
Now you'll probably have to hold till this June again to get your price.
Rates are probably going to go up, not go lower.
This is a key indicator to the Feds, they'll look at this as a healthy adjustment.
Further lessening the likelihood of their lowering rates any time soon.
That impacts your buying ability, as well as your buyers ability.
If you are buying - buy now. The market probably isn't going to go lower and why wait?
Get in the game!

To the long term person, the buy and hold, the RE investor:
Nothing new, business as usual.
We're in it for the year over year.
We have an exit strategy, we know where we are going.
The market fluctuates because that what it does.

I've said it before.
We are special here in the bay area.
Not "little yellow bus" special, insulated from the rest of the nation special.
I'm all for investing and owning in the bay area!

Oh, and the new home sales should be coming out today.
I don't care.
Neither should you.
It's the most skewed and incorrect report we're hit with.
I'd tell you why but I'll save that for another day.