Consumer Confidence to Keep Median House Prices Buoyant
Posted by Eliza Walsh — August 10, 2006
- Q2 report shows price appreciation is slowing but not expected to drop sharply - Pleasanton, Calif., Wednesday, July 26, 2006 – The resale housing market continued its slowdown in second quarter as total unit sales decreased 25 percent across the Bay Area, year-over-year, according to a report released today by Prudential California Realty. Inventory continued to swell, rising 37 percent year-over-year. Median prices appreciated by six percent over the same period last year, softening from the first quarter median of eight percent. "Second quarter activity shows a sustained decline in market activity, year-over-year, including slowing median price appreciation, however we do not expect median prices to drop precipitously in the near term," said Sherry Chris, chief operating officer of Prudential California Realty based in Pleasanton. "Overall, the latest economic indicators are showing healthy consumer confidence, projected spending levels and income growth. Typically, these factors help mitigate softening in the housing market and work to keep median prices buoyant." Bay Area Market Summary Housing Type Median Price Unit Sales Q2 2006 Q2 2005 % change Q2 2006 Q2 2005 % Change Single-Family Detached Homes $789,914 $741,657 +7 13,624 18,164 -25 Single-Family Attached Homes $503,651 $477,397 +6 3,043 3,983 -24 Housing Type Average Days on Market Active Listings† Q2 2006 Q2 2005 difference (in days) Q2 2006 Q2 2005 % Change Single-Family Detached Homes 43 27 +16 45,033 33,501 +34 Single-Family Attached Homes 42 20 +23 9,430 6,137 +54
As inventory accumulated, sellers continued to dig in their heels on price and in many cases let buyers walk away without the sale. Those who were more motivated to sell their property were using price reductions and concessions such as repairs, inspections and credits for closing costs to attract buyers’ interest. Competitively priced homes in turnkey condition, particularly those in premium school districts, often received multiple offers and sold at or slightly above list price.
Added Chris: "We have come off an extremely charged market with record activity in 2005. Sellers became accustomed to commanding top dollar for their homes and creating profits in unusually short time periods. As a result, even normal activity in 2006 is going to be an adjustment for consumers. Real estate remains a solid long-term investment and sellers with a strong level of equity in their homes continued to take very healthy profits from their sales in the second quarter."
Napa, Sonoma and Solano counties experienced the most significant declines in unit sales as San Francisco and San Mateo counties outperformed the rest of the Bay Area. The highest increases in median price occurred in the District 6 area of area of San Francisco (which includes Hayes Valley/ Lower Pacific Heights) where the median price of a single-family home increased by 63 percent from $920,500 to $1.5 million.
Survey of Bay Area Counties’ Median House Prices – Second Quarter 2006